‘Bankrupt’ council announces further £80m budget gap

A council which effectively declared itself bankrupt has said it needs to make further savings of up to £79m in the next financial year.

After a budget was set in March, Birmingham City Council has noted an extra shortfall of £50m for 2025-26, meaning “significant work to identify savings” is required, councillors heard at a meeting on Tuesday.

With work still to do on the original budget gap, a further £75m to £80m will have to be saved, a report written by the head of financial planning has shown.

This budget will be presented in draft to Cabinet in October, to be scrutinised before final approval.

The local authority issued a section 114 notice in September last year before signing off on £300m worth of cuts and a 21% rise in council tax over two years.

Bosses have said the council’s financial position continues to be of significant concern to the Council’s corporate leadership team (CLT), cabinet and government commissioners, with the increased savings target making the challenge more difficult.

The largest projected increase in spending comes from the Birmingham Children's Trust (BCT) which is forecasting an additional £34.7m of pressure to support more vulnerable children with increasingly complex needs, the report reads.

A range of inflationary pressures added a further £4.1m.

Council leader John Cotton acknowledged the seriousness of the authority's financial situation

Liberal Democrat councillor Roger Harmer blasted the “ shockingly grim report” that implies “more misery for our residents in the next financial year and beyond”.

Addressing the meeting, he said: “I have no doubt there are cost pressures in BCT, but given what a fundamental cost sector it is, this council will surely challenge both the failure to forecast it three or four months ago and the levels now stated.

“If accepted, these costs would lead to far more savage cuts required in other council services to balance the budget.”

Praising the report’s transparency, the council's Labour leader John Cotton said officers and members were working around the clock to meet the challenges and to mitigate against the potential risks.

He said: “We cannot ignore the fact that the failings of the previous government, notably in the NHS and in tackling the housing crisis, have also had massive knock-on effects for councils right across the country, including our own.

“You'll see from the report that for Birmingham, we're continuing to see increased demand for services, particularly amongst children, but also strong continued demand for homelessness support as well.”

The human cost of the budget cuts has not been considered, Sabiha Aziz said

For mothers like Sabiha Aziz, who faces losing school transport support for her 18-year-old son Adam who has severe learning disabilities, budget cuts mean “losing a lifeline”.

“We are in scary times at the moment. Nothing has changed - Adam’s disabilities are lifelong, the only thing that is different is his age and the fact that Birmingham City Council has brought in a new policy to exclude his age cohort from that specialist transport.”

Adam was born 12 weeks prematurely and diagnosed with learning disabilities, severe autism and epilepsy

The family appealed against the decision but the application was rejected and they were instead offered a personal transport budget of £1,500 a year.

Ms Aziz added: “They need to be looking elsewhere to make these cuts. It’s important to understand the human cost of this.

“The travel service in Birmingham has got such a poor legacy and parents like myself have already been through a horrendous experience.

"It feels quite abhorrent. The ultimate nail in the coffin is that it’s an age lottery and if you’re unlucky enough to have a young person that falls in that 16-19 cohort, the transport is taken away.

“Things have been awful in the SEND [special educational needs and disabilities] space in Birmingham for so long - the whole system is broken”

An Ministry for Housing, Local Government and Communities spokesperson said: “Our intention is to get local government back on its feet by doing the basics right, and we will start by providing councils with more stability through multi-year funding settlements, ending competitive bidding for pots of money and reforming the local audit system.”