Birmingham City Council accept Section 114 Notice
There will be another extraordinary meeting next month to reveal the emergency budget.
Last updated 26th Sep 2023
Birmingham City Council have accepted the Section 114 Notice - meaning they have effectively accepted they are bankrupt.
During an extraordinary meeting last night, councillors unanimously passed on the order, along with reviewing certain elements to create the emergency budget.
They'll have to look at reviewing selling off assets like the library, local taxes, reshaping services and reducing the equal pay liability.
Council Leader, John Cotton, said: "I do not for one moment under-estimate the task ahead.
"There is no overnight solution, or quick fix.
"The road ahead will be extremely challenging."
What went wrong at Birmingham City Council?
The council has been grappling with an equal pay liability, which has grown over several years.
It is now estimated to stand at around £1 billion and is increasing by millions of pounds per month.
It is also facing an in-year financial gap in its budget, which is currently in the region of £87 million, and is having to spend around £100 million on fixing errors in the implementation of a new IT system.
The council submitted a Section 114 notice, and just last week placed a second notice in as well.
They have effectively declared itself bankrupt earlier this month.
With the ruling that essential spending was set to be the way forward for the council budget.
The council asked ministers for Government support in finding a way out of their financial woes.
Government Commissioners Inbound
Last week, Communities Secretary Michael Gove announced he would appoint commissioners to take over Birmingham City Council and will launch a local inquiry into the authority.
He said he was "satisfied that Birmingham City Council is failing to comply with its best value duty" after it issued a Section 114 notice.
Mr Gove added the commissioners will have the power to make decisions directly if needed, adding he is "minded" to implement the package he has set out and the city council had five working days to make representations.
Birmingham Council Leader "apologises" for situation
Council Leader John Cotton faced his fellow councillors two weeks ago for the first time since the Section 114 notice was submitted.
During the meeting he said that the council faces "tough decisions ahead" with and "urgent re-design" required.
In the following days later, he apologised to the public for how it has left the city, but said "Birmingham was still open for business".
What's next for Birmingham City Council?
The Council have one month to put together an emergency budget, which will be the final financial recovery plan for the city.
There will be another extraordinary meeting in October where this will be outlined.
As well, Government Commissioners are expected imminently in Birmingham, and will have full control of the council for the next five years.