Save Birmingham: The Campaign to Protect Community Places
In September 2023, Birmingham City Council, the largest local authority in Europe, found itself unable to balance its budget. It issued a Section 114 notice, used when a council cannot meet its spending commitments from its income, thus effectively declaring itself bankrupt. These notices mean that a council cannot commit to any new spending, other than for essential services required by law.
Birmingham City Council is not alone: other councils that issued Section 114 notices in 2023 included Nottingham City and Woking Borough, with a further one in five council leaders expecting to declare bankruptcy within the next 15 months. It is expected that demand for local government services, particularly adults’ and children’s social care, will continue to increase throughout the 2020s. This means increased financial pressures on local authorities are set to continue, with many others on the verge of effective bankruptcy. Meanwhile, financial support from central government has been steadily reducing over the last ten to 15 years, particularly during the coalition years of 2010 to 2015. The National Audit Office estimated in 2018 that English local authorities’ spending power fell by 29% in real terms between 2010/11 and 2017/18. Using similar methodology, the House of Commons Library estimates that it remains 10% below its 2010/11 level in 2024/25.
Beyond the national picture, however, Birmingham City Council have claimed that their poor financial position came as a result of significant costs to put right an IT system that was not fit for purpose, alongside potential liabilities for equal pay claims. But the £760m equal pay figure has been challenged by some in recent months, including the Audit Reform Lab, who argue that the original figure used is speculative. The report claims that the primary driver of the council’s financial problems is the cost of the disastrous implementation of a new ‘Oracle Cloud Fusion’ IT system, and therefore that the current capitalisation direction should be redrawn and extended to April 2028, capitalising against the costs of the Oracle IT system. One year on from the Section 114 notice, the council's drastic programme of cuts is being thrown into question, with the Save Birmingham campaign asking for an immediate pause to the process.