Two experienced Labour politicians are part of the team appointed by ministers to help turn around the bankrupt Birmingham city council.
John Hutton, a Labour peer and former defence secretary, and John Biggs, a former mayor of Tower Hamlets in London, will provide political advice to the council’s leadership “as they take the difficult decisions that will be required”.
The pair will act as political advisers alongside five commissioners appointed on Thursday by the levelling up secretary, Michael Gove, to oversee a five-year recovery plan for the stricken Labour-run authority, whose financial woes led it to declare effective insolvency last month.
The commissioners will be paid fees of £1,100 a day plus expenses for up to 150 days a year, for a total of £165,000 a year. The bill will be met from Birmingham’s budget and is likely to cost the council as much as £1.5m annually.
The commissioners are expected to provide “advice and challenge” to the council. They will have extensive powers, including the ability to amend budgets and appoint and sack senior staff, although most day-to-day decisions will be taken by the current management.
Birmingham, one of the largest local authorities in the UK, has £760m of liabilities for equal pay claims, a £100m bill to fix IT problems and a projected budget deficit of £87m this year. Government funding cuts have shrunk its annual spending by £1bn over the past decade.
It now faces painful decisions as it attempts to stabilise its finances. It may be forced to sell off land and high-profile assets, such as the city library and its museum and art gallery. There are likely to be big cuts to services, many staff redundancies, and a large rise in council tax bills.
The lead commissioner is Max Caller, who has become the government’s go-to expert in recent years when it has intervened in local councils, having led recovery teams at Slough and Northamptonshire councils, both of which had declared themselves in effect bankrupt.
Other commissioners include John Coughlan, a former chief executive of Hampshire county council. Coughlan is already a commissioner at Birmingham, having been brought in by the Department for Education two years ago to help oversee the recovery of the council’s special educational needs service.
The Birmingham council leader, John Cotton, and its chief executive, Deborah Cadman, said: “Our sole focus now is on working with the commissioners in a collaborative way to meet the immediate challenges and set the council on the journey to long-term sustained improvement.”
