'Bankrupt’ Birmingham reveals 21% council tax rise

The council has been revealing details of the savings it must make

Birmingham City Council has confirmed it will raise council tax by 21% over the next two years as part of £300m budget savings.

Street lights are to be dimmed, waste collections are to become fortnightly, while burial costs will increase.

Up to 600 job losses are still likely, the local authority said.

The Labour-run authority has been revealing details of cuts it must make after declaring itself effectively bankrupt last year.

In a briefing on Monday, the council released details of how it intended to cut £150m from its budget in 2024-25 and the same amount in 2025-26.

Fortnightly waste collections are set to be introduced in 2025-26, but other savings are expected to come in almost immediately.

Dimming streetlights is expected to save almost £1m a year, while cutting spending on highways maintenance could save up to £12m, depending on the outcome of a Private Finance Initiative (PFI) - a partnership with the private sector.

Adult social care will be cut by £23.7m in the next financial year, while the Children's Young People and Families department will be forced to find £51.5m savings.

The council hopes renegotiating children's travel contracts could also save £13m a year.

Council Leader John Cotton said they were "really difficult decisions to take"

In January, the council asked ministers for permission to raise council tax by 10% in each of the next two years.

It was forced to issue a section 114 notice last year, effectively declaring itself bankrupt, after facing equal pay claims of up to £760m and an £80m overspend on an under-fire IT system.

As a result independent commissioners were brought in to help run the council.

The GMB union, which is currently balloting members for strike action over "the council's inaction" on resolving equal pay claims, said it now wanted government intervention to resolve it.

"Birmingham City Council seem to have a plan for slashing local services, but they don't yet have a plan for settling equal pay," Racheal Fagan, GMB organiser, said.

"City Council bosses are at pains to stress they need to find budget savings to settle historic equal pay claims, yet not a single penny of the wages stolen from working women has been returned.

"We need to see urgent central government intervention on the equal pay crisis but instead, they're trying to pass the cost onto ordinary Brummies."

Without intervention, the issues will become "a tragically familiar story across the country" as more councils face rising equal pay debts and shrinking budgets, she added.

Analysis: Simon Gilbert, BBC Political Reporter, Birmingham

These cuts are deep, brutal and all encompassing.

There's no getting away from it, if you live in Birmingham - you are going to feel the effects of these cuts.

Not least because a 21% increase in council tax over two years is going to leave residents hundreds of pounds worse off.

But we'll also see the effects. Things like dimming streetlighting and reduced road and grounds maintenance are areas which are likely to have a visual impact on the city.

But it's those cuts which are hidden from plain sight which could have the most serious impact.

The budgets for Adult Social Care and Children, Young People and Families face a combined £75m of savings.

These departments work with some of the most vulnerable people in the city and are often preventative. There will be real concerns these cuts could result in short-term gain, but long-term pain.

Birmingham City Council owes more than £2.9bn to lenders, placing it ahead of Leeds on £2.2bn and Woking on £1.9bn.

Last year it warned that as many as 600 jobs could go, although there is still little detail of how many jobs will go in each department.

Chief executive Deborah Cadman said no decisions would be made until the end of a period of consultation.

Speaking on Monday, Council Leader John Cotton said they were "really difficult decisions to take".

"This is a big number we're seeking to take out of the budget and clearly we know that these will have impacts on citizens in terms of services that they receive," he said.

"What we've sought to do in framing this budget is we mitigate the impact on the most vulnerable, so we've ensured that adult social care and children's services take a much lower percentage cut."

Birmingham City Council had already asked the government for permission to raise council tax by up to 10% in each of the next two years

He added he was "really sorry that we find ourselves in this position".

"As I've said since I became leader some months ago, there are issues in this council that need to be fixed and I am focused laser-like on fixing those but we're also seeing a crisis raging right across local government as well."

The opposition Conservative group on the council said the authority was in its current position "due to a failure to get serious about the council budget".

Residents were now being hit with "a double whammy of increased council tax and slashed services instead of restructuring the council to protect front-line services," the party said.

Councillor Robert Alden, leader of the opposition, added: "Birmingham Labour have hidden the details of their devastating cuts until the last possible moment.

"For an administration that had promised to be open and transparent, this is sadly exactly the kind of behaviour we've come to expect from Labour in Birmingham - symbolically underscored by the constant refusal to publish the draft budget and the letters they have sent saying they are not going to set a balanced budget without selling the city's assets.

"The Labour group has been discussing their plan to gut the city's services for a year and yet have left it until the last two weeks to tell Brummies of their plan."

Councillors will next meet to discuss the budget on 5 March.