Birmingham Council's Oracle IT Project Faces Mounting Costs and Delays
What was once heralded as a transformative digital upgrade for Birmingham City Council has descended into what critics are calling one of the worst blunders in local government history. The council's ambitious Oracle finance and HR system, initially projected to cost £20 million with anticipated annual savings, has spiralled to an estimated final bill of over £145 million – more than seven times the original budget.
A Project Mired in Setbacks
Five years after its initial unveiling, a functional version of the Oracle system remains elusive. The latest target for the system to 'go live' is set for July, but council officers and external auditors have declined to guarantee this date will be met. An updated progress report indicates significant work is still required before a safe launch can be committed to, despite the involvement of experts, consultants, and a specialist commissioner over the past two years at considerable expense.
Councillor Paul Tilsley of the Liberal Democrats described the situation as something that would be remembered as "one of the biggest blunders within local government". The project's failures have severely impacted public confidence and were a major contributing factor to the council's effective bankruptcy declaration in 2023.
Financial Fallout and Manual Workarounds
The financial implications are staggering. By April 2028, the total cost is forecast to reach £144.4 million, with no safeguards against additional unforeseen expenses. Furthermore, the council has lost out on millions of pounds in projected savings the system was meant to deliver. Dr. James Brackley from the Audit Reform Lab previously estimated the combined cost and lost savings could exceed £216 million.
In a stark illustration of the system's dysfunction, millions of pounds have been spent on manual data entry and account reconciliation – tasks the automated system was specifically designed to perform. A recent Freedom of Information request revealed that £2.5 million alone was spent on manual checks.
Governance and Accountability Concerns
The project's implementation has been catastrophic. Originally intended to replace an ageing SAP system and modernise the council's financial, HR, and contract management, attempts to over-customise the Oracle software led to massive functional failures. The system could not reliably pay invoices, transfer funds to schools, or detect fraud among thousands of transactions, leaving Europe's largest unitary authority in a financial oversight crisis for two years.
The aftermath saw a significant exodus of senior leadership, including Chief Executive Deborah Cadman and Finance Director Becky Hellard, though no public findings have attributed direct accountability for the failings. Finance chief Carol Culley now holds overall accountability, overseen by specialist external commissioner Myron Hrycyk.
Cautious Path Forward and Inherent Risks
External auditors Grant Thornton, alongside council chiefs and government commissioners, advocate for a cautious, quality-focused approach over rushing to meet deadlines. While acknowledging "huge progress" in governance and transparency, they emphasise that going live with a non-functional system would be disastrous.
Project Director Philip Macpherson reported that a team of 100, including Oracle experts and council staff, are working full-time on the project. However, external auditor Tom Foster noted the council still has only a "small pool" of Oracle-skilled personnel, with overall proficiency remaining quite low. Plans for an Oracle support partner and a dedicated 'centre of excellence' for training are deemed vital for future success.
As the council nears completion, the audit committee has approved eight new recommendations to manage ongoing risks. These include rigorous checks on data quality and close monitoring of transactions. Commissioners continue to classify the project as a significant ongoing risk, a concern echoed in the council's draft budget for 2026-27, which highlights the potential for further delays and costs.
The Birmingham Oracle saga stands as a cautionary tale of digital transformation, where ambition collided with flawed execution, leaving taxpayers to foot an ever-growing bill for a system that has yet to prove its worth.
