New West Midlands council finance boss ‘horrified’ by past mistakes

Birmingham Council’s new finance boss has said lessons must be learnt from ‘past mistakes’ after a new report triggered concern over governance and risk management.

Green councillor Chris Garghan recently became the council’s cabinet member for finance after a minority coalition involving his party, the Lib Dems and various independents took control of the authority.

The authority declared itself effectively bankrupt back in September 2023.

Drastic action was taken by the council’s Labour leadership at the time, including an unprecedented wave of cuts to local services and council tax hikes.

The council is now not ‘bankrupt’ and no longer faces a £300m black hole – but the new administration will still have to deal with pressing issues when it comes to finances.

A report by Andrew Hardingham, the independent chair of the audit committee, acknowledged that progress had been made but also concluded it had not been able to provide “reasonable assurance” the council had the following in place:

• Fully adequate and effective governance.
• Risk management.
• Internal control arrangements in place.

Commissioners, sent in by the government to oversee the council’s financial recovery, supported this conclusion and said the new council must “ensure progress continues to be made”.

Speaking at Tuesday’s meeting, Conservative councillor Alex Yip said the report “paints a deeply concerning picture of the state of governance” at Birmingham City Council.

Referring to the above findings, he said:  “This is after years of intervention, commissioners and reform programmes – it is an extraordinary conclusion.”

Cllr Jex Parkin, Reform group leader, argued: “This is not an abstract governance report – residents are still carrying the cost of weak controls, delayed systems and poor information.

“The question is not whether improvement plans exist – it’s whether the council can show that controls now work in practice.”

Another challenge that also needs addressing is the trouble-hit ‘Oracle’ IT transformation project, which has been named as one of the key factors behind the council’s ‘bankruptcy’.

Cllr Sam Forsyth, from the Birmingham Independents Group, told the council chamber: “We have a dysfunctional and over-costly IT system.

“That system is still not up and running properly.

“It was millions and millions and millions of pounds wasted on that IT system.”

Cllr Chris Garghan, the new cabinet member overseeing finance, said he recognised the “issues and concerns” raised by other councillors.

“Demonstrably over the last few years the city’s governance hasn’t been adequate – to put it lightly,” he said.

“I’ve obviously only been in post for the best part of a month and already I’ve been surprised, and in some cases horrified, by what I’ve learnt [about] what’s gone on in the past.

“We can’t dismiss that – we need to learn from past mistakes.

“This is why I’m encouraging everybody to really seriously engage with the audit committee.”

He continued: “It is the responsibility of everyone who’s sitting on a committee, everybody who has some kind of responsibility – which is all of us – [to make sure] this council is properly run.

“This council can’t work without effective scrutiny, without those awkward questions being asked.”

Other issues, such as the equal pay fiasco, contributed to the council’s financial crisis while Labour councillors pointed the finger at previous Conservative governments.