Birmingham: Pressure on government to look at council funding

GMB union members have protested in Birmingham about the evaluation of their roles

The news that Birmingham City Council has declared itself effectively bankrupt is only likely to add to the pressure on government to take another look at how council funding works.

There are particular circumstances affecting this local authority to do with a bill for equal pay claims and a problematic IT system, but it's not the only local authority facing tough financial times.

The government has made more money available to spend for this year and next year, but councils say the cost of providing services has shot up so much they're still short.

Some are turning to their reserves - basically money they've set aside - to help pay for day-to-day spending, and others are trying to find ways to cut back.

That can affect the services that people rely on, like leisure centres or support for people with disabilities.

Remember, councils were hit hard during the years of austerity - and so now some are warning that they are really struggling to make ends meet.

Birmingham City Council's been sounding warning signals about its financial position for some time.

• Live: Birmingham City Council declares itself effectively bankrupt

• PM rules out Birmingham bailout

• Council reveals voluntary staff severance scheme

The authority had already said it would stop spending on everything that's not completely essential - now it's issued a notice which basically means it can't balance the books.

That doesn't mean the council will stop functioning - councils have to provide certain services by law.

But it does mean it's in serious financial straits and now has to have a meeting to work out what it's going to do next.

There have been calls for some time for the government to re-examine the way that councils are funded.

They get money in three main ways - from central government grants, through business rates and from council tax.

Council leaders say they often don't know how much money they're going to get for each year far enough in advance and so they struggle to work out future spending plans.

In the 2021 spending review, councils were set funding levels up until April 2025, but many leaders say they want more certainty.