Government told West Midlands city 'needs more money'

Andy Burnham’s government has been told that Birmingham ‘needs more money’.

The council’s recovery journey was recently hailed by the authority’s leaders around three years after it declared itself effectively bankrupt.

Amid this financial crisis, the council’s previous Labour administration took drastic actions such as alarming waves of cuts to local services, council tax hikes, asset sales and plans to transform services.

A balanced council budget was set earlier this year before a minority coalition – including the Liberal Democrats, Greens and various independents – took over in the summer following this year’s local elections.

This alliance acknowledged recently that the council’s financial situation has greatly improved – but as a new report revealed, financial pressures for the local authority have not disappeared.

“It costs around £120 million each year simply to meet inflation, pay costs and the needs of a growing population,” it revealed.

The report went on to warn that a forecast shows budget gaps of £4.9 million in 2027/28, £13.7 million in 2028/29 and £88.2 million in 2029/30 if action is not taken.

“Demand and complexity in adults’ and children’s social care, homelessness and temporary accommodation remain major pressures,” it said. “The right response is therefore neither complacency nor a return to short-term cuts.

“It requires disciplined investment, sustained transformation and a relentless focus on prevention, productivity and value for money.”

Against this backdrop, Green Councillor and deputy leader of the council Julien Pritchard argued that the funding Birmingham receives from national government is still not enough.

This is despite the 2026-27 Local Government Finance Settlement making available £78 billion in core spending power for local authorities in England – a 6.1 per cent increase compared to 2025-26.

The money is also part of the first multi-year funding settlement in over a decade, which the government says will give councils three years of financial certainty so they can plan ahead rather than firefight year to year.

But Cllr Pritchard told a recent meeting: “The budget position is better than it has been for years and we’re not complacent [but] this council needs £120 million extra every year just to stand still.

“It shows the money we’re getting from government is just not enough for the needs of the city and the needs of our citizens.

“Although we have had some funding increases, it’s nowhere near put back what was ripped out of this city in real terms over the last sixteen years.

“The Labour government hasn’t really given the city the funding it really needs and its residents deserve.”

In response to these comments, a spokesperson for the Ministry of Housing, Communities and Local Government said it was making up to £2 billion available for Birmingham by 2028-29.

“[This is] an increase of more than 45 per cent compared with 2024-25, to help deliver high-quality public services for residents,” they told the Local Democracy Reporting Service.

“This includes £117.9 million in Recovery Grant funding, giving the council additional support to recover from historic funding cuts.”

The government previously said its funding injection is aimed at restoring pride and opportunity in left behind places, to get back what has been lost.

It added that councils will have more resources available to bring back libraries, youth services, clean streets, and community hubs.

By the end of the multi-year settlement, it is expected that the government will have made available a 24.3 per cent increase in core spending power, worth £16.6 billion, since coming into power in 2024-25.

Cllr Chris Garghan, the cabinet member for finance at Birmingham Council, stressed the authority’s leadership is not proposing to return to a “system of short-term cuts and salami slicing” despite the challenges.

The Green Party councillor also clarified that the forecast budget gaps are for if action is not taken by the council’s leadership.

“Financial recovery is the beginning of the journey, not the end,” he told the recent meeting. “The reality is it costs around £120m every year simply to stand still, to meet inflation, pay costs and growing service demands.

“Our approach is centred on clearer transformation, prevention, getting increased productivity and value for money.”

Cllr Roger Harmer, leader of the council, added that “work now needs to be done to deliver savings” and address the forecast deficit in 2029/30.

“But we have time to do that – we need to use that time well,” he said.