Politicians in Birmingham have called for council cuts, thought to be the biggest in local authority history, to be halted or scaled back over concerns the council’s financial crisis may have been overstated.
Birmingham city council is planning to make £300m in savings and sell assets worth £750m before April 2026 after it issued a section 114 notice, in effect declaring bankruptcy, in September last year.
There are concerns, however, that the council does not have a clear picture of its financial situation, and that proposed cuts are based on potentially inaccurate data.
This week a report from the Audit Reform Lab, at the University of Sheffield, commissioned by the Unite, Unison and GMB trade unions, said “cuts and asset sales were progressed in a context of uncertainty around the quality of financial information used to justify these interventions”.
It concluded the council’s financial problems were attributed to a “prematurely disclosed and potentially overstated” equal pay claim liability of £760m that “remains speculative and unaudited”.
The report found cuts had been pushed through with “little public consultation” under “statutory direction”, and would probably lead to “cost spirals and worsening outcomes for the city”.
Laurence Turner, the Labour MP for Birmingham Northfield, said “serious consideration” should be given to spreading the cuts over a longer time frame, and called for a public inquiry to find out what had happened at the council.
“The speed this is happening is a real concern,” he said. “With libraries, for instance, the loss of buildings and specialist staff would take years to recover. Some council services are being cut by 50%,” he said. “And the worry is making these cuts now is just shoring up problems for the future.
“There are serious questions that need to be answered by the people involved in issuing that section 114 notice, and the external auditors. I think as more information comes to light about the financial situation, the approach being taken [to cuts] should be reassessed.”
Ayoub Khan, the independent MP for Birmingham Perry Barr, said pausing the budget cuts was “not only necessary, but is what any responsible organisation would do”.
“Given the irreparable impact these cuts are already having, it is imperative to ensure that the council has a clear and precise financial picture,” he said.
“Essential services are being drastically reduced, disproportionately affecting vulnerable adults and children. To make matters worse, taxpayer-funded assets are being sold off on a large scale, possibly at a loss.”
The council sparked anger earlier this month by agreeing to sell off a Perry Barr housing development, initially designed to be an athletes village for the 2022 Commonwealth Games, at a loss to the council of more than £300m.
“Adding further insult to injury, residents are now being told the situation was not as severe as initially portrayed,” Khan said, adding “a full public inquiry” was needed and calling on the government to bail out the council from its “self-inflicted financial assault”.
The Audit Reform Lab report raised questions about how the former Conservative government handled its response to the financial crisis in Birmingham, questioning why commissioners were brought in so quickly without a “best value assessment”.
Turner said the former levelling up secretary, Michael Gove, was too hasty in his decision to send commissioners to the council to make cuts and rebalance the budget.
“We know Gove leapt straight into the most severe form of intervention,” said Turner. “Decisions made about Birmingham were politicised – we could see during the general election campaign the Conservatives spent a large amount of time hammering Labour for what happened in Birmingham.”
Fred Grindrod, a Labour councillor who was formerly the chair of the council’s audit committee, said the Audit Reform Lab report showed the “previous government embarked on a vindictive approach to the council’s financial situation”.
“The report sets out serious questions that need to be answered – by the external auditors, by the previous government and by the commissioners themselves,” he said.
“We need to extend the timeline to resolve the financial challenges that we face, and I urge the commissioners to act on this report’s recommendations and to stop destroying our city.”
John Cotton, the leader of Birmingham city council, said: “We must take responsibility for the failings that have contributed to our current difficulties, but the mistakes made in Birmingham have not occurred in a vacuum.
“Report after report shows that there’s a national crisis in local government caused by 14 years of neglect from the previous Tory government, combined with major rises in demand and cost-led pressures.”
A spokesperson for the Department of Housing, Communities and Local Government said: “We are working with commissioners in Birmingham city council on the challenges faced at the authority, and returning it to financial stability.
“Ministers have met with the leader and deputy leader of the council, and the commissioners, to discuss the progress being made there.”
