Almost two-and-a-half years after issuing a section 114, in effect declaring itself bankrupt, resulting in spending cuts and sales of assets, Leader Councillor John Cotton has today (Tuesday, February 3) declared Birmingham City Council is no longer “bankrupt.”
New proposals are set to deliver a balanced revenue budget in 2026/27, which includes an extra £130m investment in council services. The proposed budget will be discussed at Cabinet next Tuesday (February 10), before councillors vote on the proposals at Full Council two weeks later (February 24).
“The council is no longer under a Section 114 Notice. Thanks to the decisive, tough action we took to get the council back on track, the ‘bankrupt Birmingham’ tag is now a thing of the past,” said John Cotton, Leader of Birmingham City Council. “This is a significant moment in the council’s recovery and is down to the sheer hard work that has been undertaken here.”
“We have closed a £300 million budget gap, we’ve tackled our equal pay liabilities, and we are getting to grips with improving the services that the council provides for the residents of Birmingham. This is an important milestone in our improvement journey, and we will continue to take the difficult decisions required to be the council the people of this city deserve.”
Birmingham City Council, the largest local authority in the UK and in Europe, issued a section 114 in September 2023. At the time, the Labour-led council blamed a £760m bill for equal pay claims, a new IT system, and a decade of Tory government cuts—resulting in plans to sell £750m worth of assets.
But last year, James Brackley ran a fresh analysis of the council’s 2022-25 financial accounts. The University of Glasgow accounting lecturer claimed that Birmingham City Council was “likely never bankrupt” and had underestimated its reserves by more than £1billion.
“We urgently need answers as to why the largest ever cuts and asset sales programme any authority has ever faced was able to be pushed through before a proper assessment of the council’s financial situation had taken place,” said Jame Brackley, speaking to the Guardian.