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UK to appoint commissioners to run Birmingham City Council

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UK Levelling Secretary Michael Gove will on Tuesday appoint commissioners to take charge of the day-to-day running of Birmingham City Council, after the local authority effectively declared bankruptcy.

Gove will announce a period of technical consultations that will likely lead to the appointment of commissioners within weeks, according to people close to the process. They added that Gove was “willing” to make the appointments.

Commissioners would manage the council’s financial affairs and are expected to sell assets to raise money, potentially including the city library, land and its stake in Birmingham Airport.

If appointed, the commissioners would become the latest to be tasked by central government with overseeing the finances of a local government body, following similar moves by Woking and Thurrock councils.

Birmingham City Council said it did not comment on speculation.

The government said it had been “engaging regularly with” the council “about the pressures it faces”. . . and (we) have expressed serious concern about their governance arrangements.”

“We have sought written assurances from the council leader that any decision relating to the council’s equal pay issues represents the best value for taxpayers’ money,” he added.

Birmingham this month declared a section 114 notice, indicating that he could not balance the accounts this year. She said the immediate trigger had been a recent rise in liabilities, potentially to more than £750m, from equal pay claims by several thousand workers, mostly women.

The council’s budget deficit for this year is estimated at £87.5 million, but its finances and leadership had been in a tumultuous state for a long time.

It had already spent £1.1bn on an equal pay deal reached a decade ago, partly funded by a fire sale. A £75m overspend on IT, rising demand for services, declining central government revenue and dysfunction within his leadership also contributed to the latest crisis.

A previous improvement notice from the government, issued 11 years ago in an attempt to improve the performance of the council’s children’s services department, it was not lifted until May.

The same month, Labor nationally replaced the local authority leader over concerns about the leadership and governance of the council group.

Senior Conservative Party figures have blamed the Labor Party, which has led the council since 2012, for the latest failure.

The national Labor Party did not respond to requests for comment. Speaking to the Financial Times shortly after the section 114 notification was declared, council deputy leader Sharon Thompson said the authority was “drilling down” to determine the extent of its responsibilities and admitted the process would be “painful.” “.

The failure of Birmingham city council comes against a context of growing financial crisis across English local government, after more than a decade of dwindling funding from Whitehall.

The authority has had to save £1bn since 2010, when local government budgets began to be cut under austerity measures.

The sector lost £15bn in grants over a decade, with inflation eating into a bigger-than-expected funding deal agreed by ministers last year.

Some councils have declared themselves effectively bankrupt after risky financial decisions, often aimed at increasing revenue, turned out to be disastrous, including in Woking and Thurrock.

A local government member involved in turning around struggling councils said “many” others were “entering potential section 114 territory” this year, not due to any specific financial decisions but due to sustained pressures.

Predicting service cuts and closures before next April, the person said the sector was “starting to see more widespread financial concerns”, with high demand for children’s services now being a particular concern.

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