Council report says Birmingham is moving "from recovery to renewal"

Birmingham City Council's leaders say the authority is close to balancing its budget not just for this year but for the next two, three years after it declared itself effectively bankrupt.

A new report to the council's cabinet describes a "renewed sense of purpose and cautious optimism" at the council after a painful period in its history. "The overall story is one of recovery becoming renewal," it says.

"An improvement on recent years"

The council leader, Councillor Roger Harmer, told cabinet members on Tuesday that the council was close to a balanced budget for this year and the following two. "I cannot stress enough how much of an improvement that is on the challenges faced in recent years," he said.

The financial crisis, triggered largely by the cost of equal pay claims, led to an unprecedented wave of cuts to services, hundreds of property sales and sharp council tax rises. The report says historic equal pay liabilities are now close to being resolved and that work to tackle the council's problems is "showing results".

A gap still on the horizon

The report still forecasts a budget gap of £88.2 million in 2029/30 if nothing is done. Councillor Harmer said that figure largely reflected the extra yearly cost of running services, minus the extra income the council expects to raise. "Work now needs to be done to deliver savings to balance that year. But we have time to do that. We need to use that time well," he said.

Councillor Chris Garghan, the cabinet member for finance, said: "Financial recovery is the beginning of the journey, not the end. The reality is it costs around £120m every year simply to stand still, to meet inflation, pay costs and growing service demands."

Challenges and strengths

The report sets out the city's biggest challenges, including stark inequality, child poverty, youth unemployment, pressure on housing, unmet transport needs and the damage done to Birmingham's reputation by the bin strike and the financial crisis.

But it also lists strengths: Birmingham is the youngest major city in Europe and "exceptionally" diverse, with a strong business base, a major cultural offer, new devolved powers and investment, HS2 and what the report calls the city's "regeneration pipeline".

It says the council now has "stronger foundations" and a "clearer political mandate". "Birmingham still faces difficult choices, and the council must maintain financial discipline, deliver savings and demonstrate that improvement is sustained," it says. "With disciplined delivery and genuine partnership with residents, the council can move beyond managing crisis and towards shaping a fairer, greener and more prosperous city."

Opposition warning

The Conservative group leader, Councillor Robert Alden, warned against complacency. "It's really important the council doesn't treat the budget as a one-yearly thing and worry about 2029/30 when it gets to 2029," he said. "That will lead to the mistakes this council has made in the past, where you salami slice everything and you don't actually protect the frontline services residents rely on."

The council has published its draft financial plan early this year so that residents can be asked about their priorities before decisions on next year's budget are made. Government-appointed commissioners are still overseeing the council's recovery.