People in Birmingham could face years of unfilled potholes and dirty streets as well as eye-watering tax bills a result of the council effectively going bankrupt.
Council leaders were forced to issue a section 114 notice yesterday which means the local authority cannot make any new spending commitments and must meet within 21 days to discuss what to do next.
The Labour-run council is facing a financial black hole of up to £760m because of ongoing claims related to an Equal Pay dispute it lost in a landmark case in 2012.
By law, Birmingham City Council cannot make cuts to certain statutory services such as education, safeguarding children and adult social care, and the Prime Minister Rishi Sunak has previously ruled out a government bailout as the Conservatives accuse the Labour-run authority of financial mismangement.
Council bosses will therefore have to look at where they can both cut back on spending and increase revenue in order to balance the books.
Given that Birmingham is the largest authority by population in the country, looking after more than 1.1million people with a annual budget of around £3.2billion, there are a number of options.
Councillor Meirion Jenkins, the Conservative’s shadow cabinet member for finance in Birmingham, told i there are “difficult decisions” to be made as a result of the setion 114 notice.
“There are a number of things the council does on the statutory side, bin collection, looking after vulnerable people and children that we have to spend money on,” he said.
“I can’t tell you exactly what’s going to be cut but it’s not going to be pretty.”
Local government expert suggested Birmingham will have to go even further than the ‘salami slicing’ approach adopted by many councils since government austerity measures began in 2010 where a range of different services are scaled back.
For example, Birmingham could look to cut back on the £50m a year it currently spends on highway repairs and £100m a year on waste services including street cleaning.
The average waiting time for a pothole to be repaired has grown from around six weeks to nearly six months in the last five years, according to figures released under freedom of information laws.
Meanwhile, the number of potholes repaired by the council decreased from 6,505 in 2018 to 1,617 in 2022.
The local authority also paid out almost £100,000 in compensation for damage caused by potholes between 2018 and 2022, with the city’s Aston Expressway seeing eight claims alone.
Cllr Jenkins believes the need for further cuts is likely to see the situation become worse.
He said: “This is the added complication of the current crisis.
“We can’t remove contracts but with something like potholes, some of them could be turned off.
“But even if we could extricate ourselves from some of these contracts, what happens if motorists get damage and make a claim?”
Other non-essential services that could be in the firing line include libraries, parks, grass cutting and cultural projects.
With a workforce of around 12,000 people, the council may also have to consider job cuts.
“The salami-slicing approach local authorities have adopted will not be sufficient if Birmingham is required to cover the cost of its equal pay claim,” Jack Shaw, a researcher in local government, told i.
“It will likely have to take more substantive action.
“There are a range of options available such as pairing back entire discretionary serices, things like libraries, public toilets where they could try and get the voluntary or charity sector to run them.
“They could also look at selling assets, exploring the prospect of redundancies or increasing council tax above the 5 per ceent thershold.”
Other authorities that have been forced to issue Section 114 notice – including Thurrock Slough and Croydon – have looked to plug the gap by increasing council tax as high as 10 or even 15 per cent.
Birmingham already charges for services such as collecting green waste and bulky items, but these could increase.
The authority may also be forced to sell assets, including its stake in Birmingham Airport which was valued at around £67m in 2010.
Beyond day to day services, the council may also come under pressure to abandon its support for large-scale events such as the European Athletics Championships which are due to be hosted in 2026 and the annual Christmas Markets.
Cllr Jenkins said he believes everything must be on the table.
“We’re not going to fix this with garden waste charges,” he added.
“I do think we’ve got to look at big ticket items unless there is a real cost benefit, where we can say ‘this will earn more than it costs’ which is difficult.”
“Birmingham’s Christmas Markets – I don’t know if they make a profit but it’s difficult to measure.
“But the other factor is risk – the dagner is it only takes something unfortunate to happen and you’re left with a big loss.
“In Birmingham’s postion, can it manage any type of risk at all or is it better to play it safe?”
Birmingham Council declined to comment and referred i to its latest statement in which a spokesperson said: “The Council will tighten the spend controls already in place and put them in the hands of the Section 151 Officer to ensure there is complete grip.
“The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately.
“The Council’s senior Officers and Members are committed to dealing with the financial situation and when more information is available it will be shared.”