Birmingham City Council ignored advice not to host the Commonwealth Games despite “serious” financial difficulties, after it was effectively declared bankrupt this week.
Official advisers told council bosses that they should focus on its budgetary problems – warning that Birmingham would not have the resources to put on a major international sporting event in 2022.
On Tuesday, the Labour-run council, Europe’s largest local authority, issued a section 114 notice – which means all new spending will stop immediately and is likely to lead to cuts of several services.
Max Caller – a former non-executive director of the council who was appointed by the government in 2019 to help solve its financial issues – said he had told the authority in 2017 to focus on its “serious problems”.
He told The Times that council chiefs were determined to host event, which the Labour leadership claimed would launch a “golden decade” for the city.
“I take nothing away from the city and the people for the brilliant job they did in delivering the Commonwealth Games, they did an amazing job,” said Mr Caller.
“But if you’re doing that, there is a limit to the political and managerial capacity to focus on other things and it becomes all-consuming.”
He added: “We are 12 months after the event and the problems they faced before they started haven’t got better, they got worse,” he added.
Cllr John Cotton, Birmingham City Council’s leader— (PA)
The council has been grappling with an equal pay bill which is now estimated to be worth more than £1bn and is growing by millions of pounds every month.
The problem has been growing for several years and has been compounded by an £87m in-year financial budget gap and a £100m bill to fix its IT system.
It remains unclear as to whether jobs will be cut at the authority, which has pledged to keep statutory services running amid the crisis, with unions calling for urgent talks.
Its leader, Councillor John Cotton, told BBC this week that “tough decisions” would need to be made but that he was committed to addressing the issues.
The council leader was criticised for being on holiday in New York while his authority declared effective bankruptcy. Mr Cotton was reportedly in the Big Apple for his 50th birthday when the local authority issued a section 114 notice.
Labour leader Sir Keir Starmer has said there are versions of the crisis at Birmingham City Council “across the country” as he pledged to look at a settlement for local authorities.
Sir Keir said he “feels” for the city’s 1.1 million taxpayers. “I feel for the residents affected by this because they’ll be very worried about their services,” he told the BBC.
“I think, if you take a step back from Birmingham, you will see there are versions of this across the country. And that’s because, for 13 years, local authorities have been stripped of the funding they need. So we will have to look at that again.”
Rishi Sunak mocked Labour’s record at Birmingham City Council amid the authority woes at PMQs on Wednesday.
“Now we are hearing about how Labour in Birmingham are failing hardworking people, losing control of taxpayers money, and driving their finances into the ground,” said the PM. “They’ve bankrupted Birmingham, we can’t let them bankrupt Britain.”
