'Very painful process' at Birmingham to last years

Years of "very painful" budget cuts lie ahead for Birmingham residents, according to the man brought in to fix bankrupt Birmingham City Council.

The details have emerged in letters published between Max Caller, the lead commissioner appointed by the government to oversee the council, and Michael Gove, Secretary of State for Levelling Up.

In his letter, external, Mr Caller describes the Labour-run city council as being "in a precarious financial position" with a £300m budget gap over the next two years.

He added: "What is clear is that the leadership is willing to try, and we will support, guide, and challenge them over what will be a very painful process extending for some years."

The city council is due to sign off its budget on 5 March.

Plans include measures such as increasing council tax by about 21% over the next two years, up to 600 job losses and cuts to services including waste collection, children’s services and road maintenance.

The budget problems are in addition to the potential bill to settle an equal pay claim, which is now believed could reach £867m.

Mr Caller says problems have been further compounded after the council "thoroughly botched" the implementation of a finance and IT system.

There has already been an overspend of about £86m on trying to fix issues with the system supplied by Oracle, which was first switched on in 2022.

The council is about to sign off about £50m more to try and fix the problems.

Mr Caller was appointed after the council issued a Section 114 notice in September, effectively declaring bankruptcy.

He is being paid £1,200 per day to lead the team of five commissioners – each on £1,100 per day.

The letter to Mr Gove outlined how they planned to tackle the financial issues and deliver essential services.

Among the proposals were selling more than £1bn of assets to fund debts, restructuring the council to avoid further equal pay claims and focus on improving run-down housing stock in the city.

In his letter, external, Mr Gove said the commissioners had his "full support in taking whatever steps are necessary to drive the required improvements".

He added: "I recognise that the position of the council is worse than you initially feared but am encouraged by the early progress made by commissioners."

The city council is due to sign off its budget on 5 March, which includes measures such as increasing council tax by about 21% over the next two years, some 600 job losses and cuts to services including waste collection, children’s services and road maintenance.

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