Birmingham City Council accused of ‘lies’ as it announces bankruptcy

Birmingham City Council officially issued a Section 114 notice on Tuesday, an admission the council can no longer balance its books and has to restrict all new spending.

The notice is a “necessary step to get us back on strong financial ground”, said deputy leader Sharon Thompson yesterday in the first cabinet meeting following the summer recess.

The room also heard from the council’s interim section 151 officer Fiona Greenway, the finance professional who issued the notice.

She cited the historic equal pay debacle, revealed earlier this summer, the costs of which are thought to have risen to the £1 billion mark, which she said would have “exhausted” funds.

An external audit has also shown the council is unlikely to generate savings and additional revenue “to mitigate the financial challenges” and it does not have the money to meet an £87 million deficit.

The audit also highlighted concerns over the speed and effectiveness with which the council responded to “in year budget challenges” and the council’s ability to fix the issues.

In her opening address, Councillor Thompson noted the difficult circumstances of councils across the country, an unprecedented number of which have announced Section 114s, or are expected to in the near future.

But this assessment was strongly criticised by Tory opposition leader Robert Alden, who said the cabinet was living in “cloud cuckoo land”, claiming that the problems in Birmingham are being replicated across the country.

Describing Councillor Thompson’s introduction as “one of the most astonishing things I’ve ever seen”, Councillor Alden accused Councillor Thompson of “blaming lots of people other than the council".

“This administration stood an election claiming that Birmingham City’s finances were the best they had ever been for 30 years,” he said.

“They claimed that under Labour Birmingham was facing a golden decade.

“And yet now we know that the accounts in 2021, 2021-22, and 2022-23 aren’t going to get signed off.

“It was fool’s gold; it was lies to the public of Birmingham.

“It is an astonishing admission, therefore, for the cabinet to not accept, for the cabinet instead to try and blame the Government for a problem that was entirely caused by the decision making or lack of by this administration.”