Crucial services continue says 'bankrupt' Birmingham council's leader

1. The political leader of Birmingham City Council says crucial services will continue, after the council in effect declared bankruptcy
2. The council issued a notice on Tuesday to stop all but essential spending
3. The local authority - Europe's largest - has a budget gap of £87m in this year alone
4. The pressures have been linked to an outstanding £760m bill to settle equal pay claims
5. The council has already paid £1.1bn to settle claims after a Supreme Court ruling in 2012
6. The 2012 ruling found hundreds of mostly female employees in roles including catering and cleaning had not been paid fairly
7. Fixing a botched IT system could also cost up to £100m

That's all from us for now

Allen Cook

BBC News

We're ending our live coverage following Birmingham City Council declaring itself effectively bankrupt.

• The largest local authority in Europe, it issued a Section 114 notice preventing all but essential spending to protect core services
• Council leader John Cotton said "tough and robust decisions" would need to be made over cuts to services
• Downing Street described the announcement as "concerning" and the government had provided support to councils

You can continue to read more in our main story here

We also have an article on the pressure on the government over council funding

And a story on what the PM has previously said about the situation

This page was brought to you by Allen Cook, Oliver Slow, Ali Abbas Ahmadi, Jamie Whitehead and Jack Burgess and edited by Nathan Williams.

Council's effective bankruptcy 'a sobering moment'

Birmingham City Council effectively declaring bankruptcy is a "sobering moment", the chief executive of the Local Government Information Unit said.

While there were questions for the local authority to face, there were also questions for the way councils were funded, Jonathan Carr-West said.

"Our members tell us that they are experiencing the most acute crisis they can remember.

"Not only has the amount of funding been slashed by government but councils have been made to rely on short term, piecemeal funding."

In the statement announcing their Section 114 Notice, the leader of Birmingham City Council said the city had £1bn in funding "taken away by successive Conservative governments".

A spokesman for PM Rishi Sunak said it was for locally elected officials "to manage their own budgets", adding the government had provided support to councils.

Government 'in contact' with council

Some news just in. The government has said it is "in contact" with Birmingham City Council and has "requested more detail from them".

Asked if ministers would step in to bail the council out, the prime minister's official spokesman said it was right that it made clear that "councils are the ones who are first and foremost responsible".

The government had provided access to "additional support", they added.

Golden decade promise turned to 'fool's gold'

The promise of a so-called "golden decade" following last year's Commonwealth Games hosted in Birmingham has proved to be 'fool's gold', says Mackey.

He focuses on the spending on the games, calling it a "travesty" - and lists several examples of alleged financial mismanagement.

This is public money, these are our taxes that fund the council, he says, and they have been "wanton" with how they have spent it.

Tory councillor singles out John Cotton for criticism

Mackey also says that the council must bring in "some proper financial management", and to be transparent about the financial difficulties they are facing.

He adds that the council has no choice but to continue providing statutory services, while they will also be forced to abide by the contracts they have already signed.

Asked if he has confidence in most of the council’s members he says he does, although he singles out council leader John Cotton for criticism, saying "this catastrophe has got his name written through and through".

"We're elected politicians and we have to take responsibility," he says.

Labour trying to 'wriggle out of the situation'

Mackey refuses to speak about other councils - including Tory councils - that are struggling in the current economic climate. Instead, he doubles down on attacking Labour.

The council have "received all the money they require" to deal with the issues facing the organisation he says, and are trying to "wriggle out of the situation".

He references the fact that John Cotton, the leader of the council, is currently on leave, saying "you have to face up to the situation and run it, and [Labour] haven’t done that".

Tory councillor blames 'financial mismanagement'

Conservative councillor Ewan Mackey has also been speaking with BBC Radio WM, saying that today’s decision is due to "financial mismanagement" over the last 10 years of the Labour-led council.

"It’s the most vulnerable who will suffer from this," he says, describing it as a "disaster and a disgrace all rolled into one".

'Councils face £3bn funding gap over two years'

We've been hearing from Labour councillor Shaun Davies, who is chair of the Local Government Association.

In a statement he says councils in England have "a funding gap of almost £3bn over the next two years just to keep services standing still".

Davies continues by saying councils' ability to mitigate "stark pressures are being continuously hampered by one-year funding settlements, one-off funding pots and uncertainty".

He urges the government to come up with "a long-term plan to sufficiently fund local services" that includes "multi-year settlements" and "more clarity on financial reform".

Birmingham facts you might not know

BBC

Birmingham hosted the 2022 Commonwealth Games

Birmingham City Council is the largest local authority in Europe, comprising 101 elected councillors across 69 wards.

Its area of jurisdiction stretches from Rubery and Rednal in the south through to Sutton Mere Green in the north, with Birmingham's city centre sitting roughly halfway in between.

According to the 2021 census, Birmingham, which is the UK's second biggest city, had a population of 1,144,900 people.

It’s often regarded as one of the UK’s more diverse cities, something reflected in the census, which found that almost a third of its population (31%) identified as Asian, up from 26.6% in 2011; 11% identified as black, up from 9%; and 48.6% identified as white, down from 57.9% in 2011.

It’s also a city well known for its musical pedigree (Led Zeppelin, Black Sabbath and Duran Duran are among the bands from there), and it hosted last year’s Commonwealth Games.

Situation 'disappointing but not unexpected' - minister

Conservative MP Lee Rowley, who is local government minister, says ministers have been "aware of significant problems" at Birmingham City Council for some time.

He says these were caused by a failure to deal with historic pay issues, a reference to the equal pay claims it has been facing, as well a "bungled IT implementation".

Rowley says today’s issuing of the Section 114 notice was "hugely disappointing, but not unexpected".

He says that in April he requested the council undertake an external review, for which he is awaiting the outcome.

Any decisions made now to resolve the issue "must be transparent and clear", he adds.

Section 114 notice triggered after auditors raised concerns

The reason for the timing of the issuing of the Section 114 notice by Birmingham City Council was revealed in a report from the authority today.

Concerns were raised on Friday by external auditors over the money put aside by the authority for equal pay claims in its accounts for 2020-21 and 2021-22, the council's interim director of finance, Fiona Greenway, said.

They said it was understated and meant the council would have "exhausted its general fund balance on an accounting basis".

The auditors also questioned how the authority would be able to generate the savings or extra income needed to reduce the financial challenges.

Greenway said there was also a projected deficit of £87m for 2023-24 for which the council did not have enough in its reserves, given the equal pay claims in previous years, to cover.

Labour MP questions council's financial management

Preet Gill, the Labour MP for Birmingham Edgbaston, has been speaking with BBC Radio WM and says there are still many questions that need to be answered about how the council has come to this point.

She asks why money was "not being set aside every year" given the £760m equal pay claim the council has been facing.

There has got to be accountability.

Preet GillLabour MP, Birmingham Edgbaston

However, Gill also says she has full confidence in council leader John Cotton - who is also from the Labour Party - saying he has been "open, honest and transparent" about the difficulties being faced and was "not shying away from difficult decisions".

What's been happening today?

Getty Images

In case you're just joining us or would like a refresher, here's a summary of what has been going on:

• Birmingham City Council - the largest local authority in Europe - has declared itself effectively bankrupt
• The council issued a Section 114 notice linked to a bill of up to £760m to settle equal pay claims that it could not afford
• This means the council cannot make any new spending commitments; funding for statutory services will continue
• The Labour-run council has called this a "necessary step" to get the city back on firm financial footing, while the Conservative opposition has said the council "failed to show the proper speed and urgency needed to tackle equal pay"
• A bailout for Birmingham City Council had been previously ruled out by the prime minister
• Birmingham residents have been getting in touch with us, with one calling the council "laughable" and another describing the situation as a "shambles"

We've been asking for your reaction to this all afternoon, so let's take a quick look at some of your thoughts:

Birmingham has already been suffering from lack of investment since 2010. The whole physical and societal fabric of the city risks coming apart. I can see it being split into a north and south council area, separating the relatively affluent south from the poorer north."

Joe in Birmingham

Why did Birmingham City Council give the go ahead last month to knocking down Lifford Lane recycling centre and building a new one that will take two years and no doubt cost the tax payers of Birmingham millions?"

Lee in Cofton Hackett, near Birmingham

If you'd like to let us know what you think, you can get in touch in the following ways:

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• Tweet: @BBC_HaveYourSay
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In some cases a selection of your comments and questions will be published, displaying your name and location as you provide it unless you state otherwise.

Your contact details will never be published.

Birmingham council lacks political leadership - Tory MP

We've just been getting some more political reaction.

Gary Sambrook, the Conservative MP for Birmingham Northfield, has accused the city's Labour-run council of “lacking effective political leadership”.

In a thread on X, formerly Twitter, he wrote that Birmingham’s suburbs “have been overlooked and taken the brunt of neglect” while resources were “piled into the city centre”.

He criticises Labour for "destroying Birmingham's reputation and effectively bankrupting the city".

Birmingham residents bemoan 'laughable council'

BBC / Stephanie Barnard

People living in Birmingham have been sharing their views with us, with many seemingly unsurprised at the financial issues faced by the council.

Gordon Ray tells the BBC he has lived in the city all his life and has seen a “steady decline” in services provided by “this laughable council”.

He adds that he believes no-one will be held accountable for what’s happened, and that he is not siding with any political parties as he doesn’t “feel the alternatives would have fared any better”.

Another resident of the city, who wishes to remain anonymous, calls the situation a “shambles”, saying this “is the worst council I’ve ever dealt with”.

They say they have been challenging a parking ticket for several years, but have never received a response despite calling every department they could.

“They are behind in every sense,” they add.

Councils have borne brunt of Tory economic failure - Labour

Following the news today of the Labour-run Birmingham City Council declaring itself effectively bankrupt, we've just been hearing from a spokesperson for the party.

Councils up and down the country "have borne the brunt of the Tories' economic failure”, a statement from the Labour Party says.

The Conservatives have “let down” British families, who have had to pay more in council tax even though their services are crumbling, the spokesperson argues.

Instead of taking “personal responsibility” Prime Minister Rishi Sunak “boasts” about moving money from deprived to wealthy regions instead, they add.

The alternative is a Labour government, the statement concludes, which would “give English towns and cities the tools they need to develop credible, long-term growth plans”.

Greens blame '13 years of Tory austerity'

We’ve just been getting some more political reaction to today’s news, with the Green Party blaming the situation in Birmingham on “13 years of Tory austerity”, while also saying it should “serve as a wake-up call to Labour” to raise taxes on the wealthy.

“It’s time to tax the super-rich, who have seen their wealth mushroom in recent years, so as to provide extra money to maintain vital public services,” Green Party co-leader Carla Denyer says.

'No plan' from city council - West Midlands mayor

PA Media

Today's announcement from Birmingham City Council is "deeply disturbing", the Conservative Mayor of the West Midlands Andy Street has said.

He says despite assurances that a plan would be produced after the equal pay claims bill details were revealed earlier this year "no plan has emerged".

"I am incredibly concerned that citizens – and the services they rely on – have been let down in this way," he says.

The mayor adds he would "leave no stone unturned" in working with ministers, government officials and the council on a solution.

“However bad today’s announcement, I will play my part to ensure the city gets through this," Street vows.

Solutions include 'possible break-up of council' - political economist

Birmingham City University

The future of Birmingham City Council as a whole could be at stake among solutions to the current financial crisis, Dr Steven McCabe from Birmingham City University has said.

The associate professor and political economist says the council has thrown itself "at the mercy of central government" despite the prime minister already ruling out a bailout.

"Even if the government does intervene, it's likely to be with severe conditions, such as the possible break-up of BCC, which would be a bitter pill to swallow," he says.

Cuts to services were inevitable "to all but essential services", Dr McCabe adds.

Any talk of Birmingham stepping in to host the Commonwealth Games in 2026 "would seem impossible" and support for major sporting events in the city, such as the 2026 European Athletics Championships, "may have to be pared back", McCabe says.