'Bankruptcy in past', says Birmingham City Council

Birmingham City Council has declared itself no longer effectively bankrupt after steadying its finances two-and-a-half years after hitting a budget crisis that the government stepped in to solve.

In budget documents made public ahead of a council cabinet meeting next week, the authority states its financial situation for 2026-27 will be "balanced", with services set for £130m investment.

Since autumn 2023 and the emergence of a vast financial black hole linked in part to equal pay liability, residents have seen service cuts and a 17.5% council tax rise over the last two years.

On Tuesday the council said it was no longer in such dire straits, but a maximum tax hike of 4.99% was still planned.

Council leader John Cotton said: "Thanks to the decisive tough action we took to get the council back on track, the 'bankrupt Birmingham' tag is now a thing of the past.

"We are back in the mainstream of local government."

The Labour-run council has had government commissioners in place to help steer the ship throughout its financial woes that as well as equal pay issues were connected to millions spent on a botched IT system upgrade.

Cotton said: "We have closed a £300m budget gap, we've tackled our equal pay liabilities, and we are getting to grips with improving the services that the council provides for the residents of Birmingham.

"This is an important milestone in our improvement journey and we will continue to take the difficult decisions required to be the council the people of this city deserve. I'm determined the mistakes of the past will not be repeated."

In the meantime, the council continues to work with the commissioner.

With regard to the £130m investment, Cotton said it would be spent on cleaner streets, libraries and youth provision including tackling knife crime.

Budget detail shows, though, there would still be £93m of efficiency savings made for the period - £66m which are new savings.

When asked on Tuesday whether residents should be facing a tax rise lower than 4.99% for the year after bearing such a large rise in the preceding 24 months, Cotton said there were still major services for which to provide.

He added there was support for lower income residents.

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