Whose fault is it that Labour-controlled Birmingham city council, the country’s biggest local authority, is now effectively bankrupt? The answer, according to the council’s leaders, is that it is anyone and everyone’s fault except their own. It is the fault of the government for imposing funding cuts over the last decade, the ballooning costs of rolling out a new IT system, and a historic equal pay settlement that is proving impossible to fund. In other words, it is nothing to do with those actually elected to run Birmingham. Is anyone surprised that politicians are held in such low esteem by the voters?
The bare facts are these. The council has issued a section 114 notice, signalling that it does not have the money to balance its budget. The notice effectively puts a stop to all council spending in order to ensure core services such as social care are protected.
Birmingham’s leaders have been quick to play the blame game. The council says the funding crisis has been brought about by £1billion in government cuts over the past decade, and the £100million cost of rolling out a new IT system, up by tens of millions on the original projected costs.
Labour has run Birmingham for too long to get away with passing the buck so easily
The most pressing financial headache involves a £760 million (and rising) bill for settling equal pay claims which the council does not have the resources to meet. The pay settlement stems from a historic case in which thousands of women employed by the council were granted compensation in 2014 after winning their claim that they had missed out on bonuses awarded to men on the same level. The claims stretch back over several years. In June, the council revealed it had paid out £1.1 billion in equal pay claims over the past decade. An independent governance review has been commissioned into the issue and is expected to report in the coming weeks. How can any local authority have got itself into such a mess?
In a statement, the Labour leader and deputy leader of the council, John Cotton and Sharon Thompson, were eager to paint Birmingham as a victim of bigger national forces outside their control:
‘Like local authorities across the country, it is clear that Birmingham city council faces unprecedented challenges — from huge increases in adult social care demand and dramatic reductions in business rates income, to the impact of rampant inflation, it is clear that local government is facing a perfect storm.’
Well, yes and no. It is no secret that local authorities have faced significant cuts over the last decade but the majority of councils are managing to keep services running. And there has been help from Whitehall to ease financial pressures. The government says it has provided an additional £5.1 billion to councils in 2023-24, which equates to more than a 9 per cent increase for Birmingham.
While it is true that similar bankruptcy notices have been issued by cash-strapped councils including Croydon and Thurrock, Birmingham’s leaders come across as far too eager to pass the buck. It is ultimately the responsibility of elected local leaders to manage their own budgets and be accountable. That is what they are elected to do. How are voters to judge if the council has been sensible in terms of the best use of taxpayers’ money if everything is always someone else’s fault?
Only last year, Birmingham council published a financial plan designed to ‘maximise the potential of a golden decade for the city’, ahead of the Commonwealth Games last summer. How can such a rosy financial picture turn to dust and bankruptcy in such a short time? Questions aplenty but few answers from the ruling politicians.
Labour has run Birmingham for too long to get away with passing the buck so easily. Its growing list of problems encompass more than just finances. Earlier this year, the regulator of social housing found that the local authority had breached its consumer standards. The regulator identified a series of health and safety issues across thousands of homes.
Meanwhile, an investigation by Labour national headquarters found that the local party was ‘dysfunctional’, and led to a new leadership team being imposed by diktat on the local party in May. This is no way to run a huge city. Is it really too much to expect better and more effective financial management from those running local authorities?
Birmingham’s one million residents are now left wondering what price they will have to pay in cuts to services and increases in their council tax. They deserve better from their local politicians.
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