Birmingham City Council Approves Tax Hike, Cuts to Key Services

A general view of Council House in Birmingham on Sept. 19, 2023. Matthew Cooper/PA Wire

Birmingham City Council has approved a council tax rise by 9.99 percent for the next financial year alongside a number of cuts to services provided by the local authority.

The vote comes after the council announced its effective bankruptcy in September 2023. Appointment of commissioners ensued the council’s Section 114 notice. A review of the council’s finances resulted in instructions to balance it for the next two years.

On Tuesday, councillors voted in favour of £300 million in cuts over the next two years. The council tax will be raised by 21 percent in the same period.

To this end, the local authority will take measures, such as dimming street lights to save £900,000 and cutting highway maintenance spending by £12 million. Council residents will also see their rubbish collected fortnightly to save £4 million a year.

Slashing the services will help the council secure the much-needed exceptional financial support (ESF) from the government. Over £1.2 billion has been requested by the council in government funding, to which the commissioners said: “The EFS is really nothing more than a loan from government that must be paid back through asset sales.”

During the debate, Council leader John Cotton apologised for the “unprecedented” scope of cuts of over £300 million. The “harsh reality” is that cuts are necessary to meet the challenge set by commissioners, he added.

The commissioners, appointed by the UK levelling-up secretary Michael Gove, have warned that if the budget isn’t balanced within two years, there is a risk that “the Council asset base will not be large enough to support a further request for EFS.”

The new savings programme includes selling capital assets, such as buildings, and reduced funding for adults social care and children care services.

“It is not a budget I ever envisaged for our city. Sadly, however, it is a budget that reflects the significant challenges currently facing this council,” Mr. Cotton said.

Let Down

The Labour-run Birmingham council is the largest local authority in the UK and Europe, serving 1.1 million taxpayers.

Mr. Gove took to X, formerly known as Twitter, to say that Birmingham “has been terribly let down by Labour mismanagement.”

He added that not all local authorities in the country were in the same position. Mr. Gove noted the “stark” contrast between the management in Birmingham City council and the “wise stewardship” of West Midlands by mayor Andy Street.

The Conservative group leader Robert Alden told councillors that “Birmingham Labour have made a mess of the council’s finances” without a plan in place to “fix that mess.”

“Instead all Birmingham Labour have to offer is a double whammy of higher taxes and fewer services,” Mr. Alden added.

The council’s financial collapse came following its failure to settle a £760 million bill on equal pay claims and a flawed implementation of a costly Oracle ERP software system.

“For Brummies, the council is running out of time to fix its finances before all services loved by our city are lost,” Mr. Alden said.

Birmingham is the latest council to have announced its effective bankruptcy, following similar cases of the Woking, Thurrock councils. Faced with the cost-of-living crisis and high inflation, local authorities have struggled to retain the same level of spending on key services.

Mr. Cotton said the Birmingham council faced “a perfect storm of smaller budgets but higher costs, leading to widespread cuts to waste collection, road repairs and leisure services.”

Commenting on the vote, Unite national officer for local authorities Clare Keogh said the budget cuts were “devastating.”

“Vital public services are on the brink of being all but destroyed. This is the culmination of years and years of brutal budget reductions by central government,” Ms. Keogh added.

PA contributed to this report.