Bankrupt council to request tax hike above 4.99% limit

Birmingham City Council is looking to raise its council tax by more than the limit of 4.99% in an effort to combat its plague of financial issues.

It is set to write to the government to secure permission for the hike without holding a referendum as it hopes to meet commissioner’s deadline of finding £300m in savings by January 7.

Savings of £149.8m have already been identified but the financial position of the council remains “extremely serious and challenging”.

An overspend of £87.4m has been forecasted for 2023/24 and is projected to rise to £165m in 2024/25, £177m in 2025/26, £172m in 2026/27 and £180m in 2027/28.

The government granted Croydon Council permission to raise its council tax in 2024/25 without a referendum resulting in an increase of 14.99%.

The move follows the beginning of a ballot for strike action, with more than 3,000 staff set to vote over the council’s “delay” in settling its £760m equal pay liability.

The council effectively declared itself bankrupt following the liability, an £80m IT overspend and a series of budget cuts.

Council leader John Cotton addressed the issue at a council meeting yesterday and said the increase above the limit would be applied “if necessary”.

He said: “It’s clear that we’ll need to seek exceptional financial support from the government in order to bring the council’s budget back into balance.

“These are obviously very tough times, we’ve got some difficult and challenging decision ahead of us in shaping this budget.”