Birmingham City Council continues to navigate four significant threats to its recovery, even as government-appointed overseers acknowledge the authority is moving in a "positive" direction. The Labour-run council, which declared effective bankruptcy in September 2023, is still grappling with the fallout from a catastrophic financial crisis that triggered deep service cuts and council tax increases.
Commissioners Identify Persistent High-Profile Risks
A new report from the commissioners, sent in to supervise the council's turnaround, will be scrutinised by councillors next week. While it notes "enhanced resilience and improved performance in some areas", such as housing and children's services, it highlights four ongoing major challenges.
The first is the ongoing bins strike, which the report states has had a "destabilising effect on corporate capacity", delaying vital transformation work and financial improvements. Secondly, the colossal equal pay liability remains a "significant risk", despite recent progress including a framework agreement signed with trade unions.
On finances, the commissioners warn the council is still "financially fragile". Although budget planning has improved, the report stresses that the asset sales programme faces an "immense" scale of challenge and that transformational savings are not yet being realised. The fourth risk surrounds the troubled Oracle IT system implementation. While it is currently on track, maintaining momentum is deemed essential to ensure its full and successful delivery.
A Corner Turned, But Long Road Ahead
Council Leader, John Cotton, responded to the report by asserting the organisation had "turned a corner". He pointed to a dramatically reduced budget gap, with the 2026-27 shortfall now at £1.7 million, down from £83 million, and the 2027-28 gap cut from £127 million to £10 million. The council claims it is close to balancing its revenue budget without further Exceptional Financial Support from government.
However, the commissioners emphasised that the council's long-term sustainability hinges on tackling deeper, more persistent issues. These include embedding a lasting culture change, addressing governance reforms, and ensuring the council operates as a "coherent corporate entity".
Government and Commissioner Outlook
Minister of State for Local Government and Homelessness, Alison McGovern, said she was encouraged by the progress but echoed the warnings on equal pay, calling it a "substantial risk". She urged the council to maintain "absolute focus on delivery" with key milestones like the Oracle reimplementation and equal pay resolution due in 2026.
Lead Commissioner Tony McArdle OBE indicated that an exit strategy from government intervention is being developed. This plan will set out the precise actions and behavioural changes the council must achieve before the statutory directions expire in October 2028. The commissioners' report is scheduled for discussion by the council's finance scrutiny committee on Tuesday, 6 January.
