Birmingham City Council ceases non-essential spending after £760m bill

Birmingham City Council has imposed spending restrictions and ceased non-essential spending after several failures.

The council revealed last week it needs to pay up to £760m to settle equal pay claims, which is £10m more than its entire revenue budget for the year.

It comes after the implementation of its new IT system Oracle rocketed from £20m to £100m in cost, with a report recently revealing the council needed to request £46.53m this year to fund the required work.

Now, an independent governance review in collaboration with the Department for Levelling-Up, Housing and Communities will be commissioned this week to focus on the two issues.

A judge-led inquiry will also occur, to determine the causes of how the equal pay liability has continued to grow since 2012 and who is accountable.

And an independently chaired, internal management review will be launched to ascertain the root causes of the failure to effectively implement Oracle.

Birmingham City Council leader Cllr John Cotton said: “I’ve been clear from day one that I will take whatever action is needed to address the substantial challenges facing the council and these measures are essential to grip the situation – particularly in terms of financial controls, organisational capacity and improved governance.

“We will be open and transparent throughout this process and the independent reviews and judge-led inquiry will ensure that there is proper accountability for these failings.”

Birmingham City Council deputy leader Cllr Sharon Thompson added: “This is one of the biggest challenges this council has ever faced, and we must understand how the issues have arisen to prevent a repeat in the future.

“Given the scale of this challenge, we must impose mandatory spending restrictions. But as we have done throughout the cost-of-living crisis, we will continue to focus on tackling social injustice and inequality across our city. We will do everything we can to protect the services our residents rely on.”

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