A ray of hope for Birmingham residents after years of tumult - but challenges remain

Since it declared itself effectively bankrupt in September 2023, the city council has been through one of its most tumultuous periods in its history – sparking misery for Brummies.

Amid an enormous financial black hole, the Labour-run council was forced to approve an unprecedented wave of cuts to local services, hike council tax and dispose of more than £250 million worth of ‘assets’, with many more sales still in the pipeline.

But this week the council said that it is no longer ‘bankrupt’ as it revealed its plans for next year’s financial budget.

Council leader John Cotton said on Tuesday (February 3) that the authority had closed a £300 million budget gap and tackled equal pay liabilities, one of the major issues which contributed to the financial turmoil.

“Thanks to the decisive, tough action we took to get the council back on track, the ‘bankrupt Birmingham’ tag is now a thing of the past,” he said.

But a number of pressing issues continue to lurk behind this positivity from Birmingham Labour.

The bins strike rumbles on with seemingly no sight of a resolution while the reimplementation of the Oracle system has been pushed back.

The disastrous implementation of the IT system was another key factor in the financial storm which engulfed the council.

Government-appointed commissioners also wrote that there remains a “significant savings requirement” of £95 million for next year and “risks of non-delivery are material”.

Asked about such issues on Tuesday, Councillor Cotton told the Local Democracy Reporting Service: “There’s absolutely no complacency and we’ve still got an improvement journey to complete.

“What I will say is that this council is a very different organisation to the one I took over leadership of three years ago.

“We now have a balanced budget without needing further Exceptional Financial Support, we’ve tackled big challenges around equal pay.”

He continued that a “lot of work” has been done around the reimplementation of the Oracle system and that the delay was to ensure mistakes of the past were not repeated.

He added that there will always be an element of risk to be found in every savings programme when it comes to delivery.

“I don’t think Birmingham is in any way unusual to any other council in the country for that,” the Labour council leader said.

“I think the crucial difference is that we’ve now got the governance in place to ensure that what happened in the past does not happen again.”

On what next year’s budget represents, Councillor Cotton added: “I think this is a really important moment for Birmingham, being able to shed the ‘bankrupt Birmingham’ tag.

“What you won’t get from me is complacency about the work that’s still to be done but this is a really positive move for our city.”

The council also said this week said its budget for 2026/27 includes an extra £130m investment in council services, which would focus on cleaner, safer streets and better local services.

‘Beyond shocking’

Despite talk of Birmingham overcoming its ‘bankrupty’, opposition parties have argued that the city council is far from out of the woods yet.

In particular, the Conservative group said the Oracle IT fiasco “remains a catastrophic failure” and stated that there’s still a risk of future equal pay liabilities while criticising the “double whammy of higher taxes for fewer services” and bins strike “chaos”.

Robert Alden, Tory councillor and leader of the opposition, said: “Three years ago, the Labour administration effectively bankrupted the council.

“Council tax has rocketed, while services have been slashed.

“Hitting Brummies with higher taxes while refuse collections are slashed, rubbish sits on the streets, and potholes go unrepaired – it is clear only the Local Conservatives have a plan to balance the books and clean up the city.”

Councillor Ewan Mackey added: “History shows Labour’s track record in Birmingham leads to waste, delays, and repeated crises.”

The Liberal Democrats in Birmingham echoed similar concerns, with group leader Roger Harmer saying: “It is beyond shocking to hear that Labour, the party responsible for bankrupting our city, is now patting itself on the back and claiming to have fixed the issue.

“Birmingham’s council bosses should hang their heads in shame after the pain they’ve caused local people here.

“Our streets are covered in fly tipping, our roads are crumbling, and our council tax has soared year on year. Having a council not declare bankruptcy is the bare minimum.

“At the budget this month, the Liberal Democrats on the council will be putting forward a positive plan that tackles residents’ priorities,” he added. “We’ll be setting out our vision to deliver a cleaner, greener, safer city.”

As well as Birmingham-specific factors such as the equal pay debacle and Oracle, Labour councillors have said funding cuts during the previous Conservative Government played a significant role in the financial turmoil.

The bins strike dispute was initially triggered by the loss of the Waste Recycling and Collection Officer role, with striking workers claiming they face a pay cut of £8,000 – a figure the council has disputed.

The council has insisted a fair offer had been made before negotiations came to an end last summer, saying at the time it had ‘reached the absolute limit of what we can offer’ amid equal pay fears.