Birmingham City Council plans cuts of £153m amid tax hike

Birmingham City Council is seeking permission to raise residents’ tax by 9.9% this year while implementing £153m in cuts to address its financial struggles.
It comes as the council faces the need for Exceptional Financial Support (EFS) from the government to lawfully balance its 2025/26 budget.
Residents will not only see a tax hike of 21% over two years but also service cuts of £153m for 2025/26. Savings of £43m are expected to come from cuts to adult social care, £41m from children and families services, £23m in city operations and £18m from city housing.
The budget gap, initially forecast at £67m, widened by another £67m due to rising employer’s national insurance costs and higher-than-anticipated social care expenses driven by the national living wage increase.
It’s helping to tackle an equal pay liability once thought to be above £867m, an overspend on IT system Oracle of £136m and support a £100m redundancy scheme.
UNISON and GMB reached an agreement with the council last month to settle the historic equal pay claims. 6,000 predominantly women workers look set to receive settlement payments from the local authority, expected to be as much as four times higher than the payment offered to workers in 2021 said GMB.
The council says that the settlement falls within the limit of the EFS package agreed.
A report from the council’s Housing Revenue Account also said the council no longer has the capital funding available to support the continuation of Birmingham Municipal Housing Trust (BMHT) in its current form. It’s been recommended to undertake development through third parties, using relationships with registered providers and developers.
The report said: “This doesn’t mean the delivery of affordable homes is less of a priority, the Council has been working closely with partners, who have the skills, experience and commercial capacity to deliver affordable homes in a more efficient way.”
Looking ahead, Birmingham faces a projected budget shortfall of £70.6m for 2026/27, with cumulative gaps of £109.3m for 2027/28 and £138.2m for 2028/29.
Summary of 2025/26 and 2026/27 savings programme: