Where Birmingham City Council's finances stand

Birmingham City Council's finances are more stable than at any time since it effectively declared itself bankrupt in 2023, but the new administration faces difficult choices as it prepares next year's budget.

How the crisis began

In September 2023, the council issued two section 114 notices, which mean a council cannot balance its books and must stop all non-essential spending. The causes included equal pay liabilities estimated in the hundreds of millions of pounds and problems with a new finance and payroll computer system.

The Government appointed commissioners to oversee parts of the council's work, and the council was allowed to sell assets and raise council tax above the normal limit to close the gap. Deep cuts were made to services.

No longer under a section 114 notice

When the 2026 to 2027 budget was set in February, the then leader, John Cotton, said the council was no longer under a section 114 notice. "The 'bankrupt Birmingham' tag is now a thing of the past," he said.

He said the council had closed a 300 million pound budget gap and tackled its equal pay liabilities. The budget included an extra 130 million pounds for frontline services, focused on cleaner streets, safer neighbourhoods and better local services. It was approved at full council by 40 votes to 37.

The challenges ahead

The council still faces pressures common to many large councils, including rising demand for adult social care, children's services and temporary accommodation for homeless families. The bin strike has also cost the council tens of millions of pounds.

The new administration, led by Liberal Democrat Roger Harmer, does not have a majority, so it will need support from other groups to pass its first budget next February.

Have your say

The council usually consults residents on its budget proposals in the winter, before the budget is set in February. Details are published on the council's website.