Council – ‘Bankrupt Birmingham’ is a thing of the past

The leader of Birmingham City Council says the authority is now back in the mainstream of local government, two and a half years after the council declared itself effectively bankrupt.

Cllr John Cotton said there would be no repeat of the “mistakes of the past” which led to Birmingham issuing a Section 114 notice in September 2023, as he unveiled the council’s budget for the coming financial year.

A long-running equal pay dispute, which has cost the council in excess of £800m, has now been settled – with offers now being sent to claimants.

“The council is no longer under a Section 114 Notice. Thanks to the decisive, tough action we took to get the council back on track, the ‘bankrupt Birmingham’ tag is now a thing of the past,” said Cllr Cotton.

“This is a significant moment in the council’s recovery and is down to the sheer hard work that has been undertaken here in Birmingham by members and officers, supported by commissioners.

“We are back in the mainstream of local government.  We have closed a £300 million budget gap, we’ve tackled our equal pay liabilities, and we are getting to grips with improving the services that the council provides for the residents of Birmingham.”

In a statement to the Ministry of Housing, Communities and Local Government signed by Cllr Cotton and chief executive Joanne Roney, the authority confirmed it would need around £185m in emergency financial support to balance the last two year’s books – set to be funded by a huge sell-off of council assets.

However, the letter added that no extra support would be required for 2026/27, effectively putting the council back on an even keel in terms of its day-to-day revenue spending.

In summary the council said that, while challenges remained, “good progress” had been made on its budgets, adding that it had now moved away from the use of emergency government funding to balance the revenue budget.

The council’s 2026/27 budget will be discussed in a cabinet meeting on 10 February, before being signed off by full council on the 24th.

“I’m determined that the mistakes of the past will not be repeated, as we drive further efficiencies to deliver better services and value for money for council taxpayers,” added Cllr Cotton.

“This is an important milestone in our improvement journey and we will continue to take the difficult decisions required to be the council the people of this city deserve.

“I’m ambitious for Birmingham’s future. Now we will step up our work with West Midlands Mayor Richard Parker and Government to invest in our communities, delivering the homes, jobs and services that the people of this city deserve.”