Birmingham City Council prepares for 'devastating' cuts to local services after declaring itself bankrupt

Tuesday 5 March 2024

Birmingham City Council will today vote whether to introduce massive cuts to local services funded by a record 21% increase in council tax.

The Council needs to make £300 million worth of savings after declaring itself bankrupt last year.

Ministers have given the Council permission to hike rates by 10% each year for the next two years in a move that would usually require a referendum.

Libraries, parks, cultural projects, bin collections and 600 jobs could be affected, with members of the council describing the situation as "devastating".

The vote on plans to make major cuts to council services would aim to plug a nine-figure hole in its finances.

£76.57m would be cut from funding to adult social care, £115.45m from children and family services, £15.77m from city housing services and £96.38 from city operations like lighting and road maintenance among other massive cuts to funding.

The Council was declared bankrupt after it hoped to compensate equal pay claims of up to £760m with a settlement of £120m - a deal that collapsed.

This came as the GMB union claimed it found evidence the council was not properly ensuring male and female employees were paid equally.

There is increasing concern over the finances of UK councils which are likely to face collective black holes in their budgets of £5.2 billion by 2026.

Labour's Birmingham City Council stops all new spending and declares itself 'bankrupt' after £760m bill for equal pay claims

Maximum council tax rise in nearly all areas to avoid financial distress, analysis finds

Amid fears of further bankruptcies, Communities Secretary Michael Gove has been accused of telling councils how to “spend better the money they haven’t got”, according to Labour MP Clive Betts.

Labour deputy leader Angela Rayner said the Government had created a “begging bowl culture” by making councils bid for money as she called for government action to tackle long-term funding.

On Thursday, local authorities in the UK wrote to Chancellor Jeremy Hunt urging him to provide “sufficient investment to local government” warning public services would suffer without extra cash.