Birmingham City Council will be taken over by commissioners appointed by Michael Gove – and inquiry will be launched after it declared itself effectively bankrupt
- Michael Gove will appoint commissioners to run Birmingham council’s finances
- The commissioners are expected to sell off Birmingham’s assets to raise funds
The Communities Secretary said he was ‘satisfied that Birmingham City Council is failing to comply with its best value duty’ after it issued a Section 114 notice.
He added: ‘In line with the Local Government Act 1999 therefore, I can announce that I am today writing to the council to set out my proposal to intervene and to appoint commissioners and that I intend to launch a local inquiry in due course.
‘I do not take these decisions lightly, but it is imperative in order to protect the interests of the residents and taxpayers of Birmingham, and to provide ongoing assurance to the whole local government sector.’
The new commissioners will run the council’s financial affairs and are expected to sell off assets to balance Birmingham’s books, with possible sales including the Library of Birmingham, and the council’s 18.7% stake in Birmingham airport.
Michael Gove (pictured) has announced he will appoint commissioners to take over Birmingham City Council
The commissioners are expected to sell off Birmingham’s assets with possible sales including the Library of Birmingham and Alexander Stadium
The Alexander Stadium, which hosted the Commonwealth Games in 2022, could also be sold to raise funds.
The city’s Grade II listed Birmingham Museum and Art Gallery, which holds the world’s largest collection of Pre-Raphaelite paintings, and the 50-year-old Sarehole Water Mill, which is near where Lord of the Rings author JRR Tolkien grew up could also be up for sale.
The council may also be forced to sell off the Grade I listed Jacobean manor Aston Hall, which was first bought by the Birmingham Corporation in 1864, before it became Birmingham City Council in 1986.
Mr Gove also said an inquiry would be launched to look into how Birmingham City Council had ended up in its current financial position.
He told MPs that the soon to be launched inquiry will examine the ‘more fundamental questions around how Birmingham got to this position’ and options for how it can become a ‘sustainable council’ in future.
The minister said that ‘under the oversight of the commissioners’ Birmingham City Council will be expected to ‘prepare and agree an improvement plan within six months, which would set out the council’s own plans to make the necessary improvements to the whole council to return it to a sustainable financial footing.’
The decision to appoint commissioners has seen Birmingham council become the latest local authority to be taken over by central government, after Thurrock and Woking councils were both declared effectively bankrupt this year.
In a report published earlier today, Birmingham City Council warned its financial state means an urgent ‘redesign’ is necessary to balance its books.
This redesign could in turn see the local authority increase taxes and business rates, cut costs, and sell off assets, the report issued by council chief executive Deborah Cadman says.
Birmingham City Council declared itself effectively bankrupt on September 5 due to being unable to pay a £760million equalities claim
Mr Gove’s announcement comes after Birmingham City Council declared itself effectively bankrupt on September 5, due to lacking sufficient resources to pay a £760million equalities claim.
The £760million bill, which is currently accruing at rates of between £5million and £14million a month came after the council was ordered to pay compensation to staff following claims it had paid female workers less the male workers.
Costly efforts to install the Oracle ERP financial reporting software on Birmingham council’s IT systems were also blamed for the local authority’s financial state.
The failed bid saw Birmingham City Council forced to spend £46.53million to fix ‘urgent’ issues with its IT systems in June 2023, as it estimated the total cost of overhauling the system would be in the region of £100million.
Councillors blamed the situation on ‘long-standing issues’ including ‘huge increases in adult social care demand… dramatic reductions in business rates… rampant inflation’ and central government cuts.
Birmingham City Council has been forced to cut its costs by £1billion since 2010 due to reduced funding from the UK’s central government.
The local authority in turn announced that all new spending would stop immediately, with the exception of those statutory services and those that protect vulnerable people.