Bankrupt Birmingham council to raise council tax by 21% and shed 600 jobs

Birmingham residents are set to take a hit as the council attempts to cut-back to reduce their financial woes

Birmingham City Council will raise council tax by 21 per cent and cull up to 600 jobs in a bid to save £300m.

Europe’s largest local authority issued a so-called section 114 notice last year, meaning it is essentially bankrupt, after it said it faced £760 million in equal pay claims after workers alleged women were being paid less.

Europe’s largest local authority announced it was effectively bankrupt in September (Matthew Cooper/PA) (PA Wire)

In an urgent attempt to cut back spending, the council will dim street lights, waste collection intervals will increase to every two weeks and burial costs will rise.

The local authority announced the provisional changes in a briefing on Monday where they set out how they will cut £150m from its budget in 2024-25 and the same again in 2025-26.

Cllr John Cotton, Birmingham City Council’s leader (PA)

Dimming streetlights will save up to £1m a year and cut-backs on highways maintenance could save up to £12m, depending on the outcome of a Private Finance Initiative (PFI)- a partnership with the private sector.

Next to take a hit is adult social care which will be cut by £23.7m in the next financial year.

The Children’s, Young People and Families department will have to find £51.5m savings.

The local authority asked ministers for permission to raise council tax by 10 per cent in each of the next two financial years.

The announcements come as council workers claim a backlog of historical equal pay claims have not yet been resolved.

"Birmingham City Council seem to have a plan for slashing local services, but they don’t yet have a plan for settling equal pay," Rachel Fagan, GMB organiser told the BBC.

Speaking on Monday, Council Leader John Cotton told the BBC they were “really difficult decisions to take”.

“This is a big number we’re seeking to take out of the budget and clearly we know that these will have impacts on citizens in terms of services that they receive,” he said.

“What we’ve sought to do in framing this budget is we mitigate the impact on the most vulnerable, so we’ve ensured that adult social care and children’s services take a much lower percentage cut.”

He added he was “really sorry that we find ourselves in this position”.

“As I’ve said since I became leader some months ago, there are issues in this council that need to be fixed and I am focused laser-like on fixing those but we’re also seeing a crisis raging right across local government as well.”

In December, the council admitted it had an estimated £760 million equal pay liability which is believed to be growing by millions every month.