Budget gap grows to £80m for ‘bankrupt’ council
Birmingham City Council’s budget gap has increased to nearly £80m after financial pressures sent costs spiralling even further.
The savings target for the 2025/26 financial year has moved by £50.8m to a total of £194.5m, driven by: £34.7m of extra funds required by Birmingham Children’s Trust (BCT) to support more vulnerable children with increasing complex needs; £12m needed by other directorates and £4.1m of inflationary pressure.
It had already identified and approved £76.3m of savings and was yet to find and approve the remaining £67.4m.
Since then, Birmingham City Council has found provisional savings of between £39m – £43.5m, which left a shortfall of £28.4m at most.
However, as directorates are now in need of £46.7m of additional expenditure and the council itself requires £4.1m of inflationary pressure, it’s pushed the budget gap to £118.2m (£67.4m forecast in March plus the £50.8m of extra pressure).
Commissioners have slammed the council and its “mindset” and said that the report sets out “a fair reflection of the current dire financial position”.
For the council to reach financial stability, Commissioners say the huge challenge requires a “whole council response” as well as “a fundamental shift of mindset which is not yet evident or even accepted in parts of the organisation”.
Birmingham City Council had already passed what are thought to be the largest budget cuts in local authority history in March.
Residents of the largest local authority in Europe have been hit with a council tax increase over the current referendum limit from 4.99% to 9.99% for the next two years.
It will help to tackle an equal pay liability above £867m, an overspend on IT system Oracle of £136m and support a £100m redundancy scheme when it cuts 600 jobs.
