Birmingham City Council debates 9.99% council tax hike and £300m of cuts

Councillors were told higher taxes are needed to compensate for the ‘harsh reality’ of the authority’s finances.

The Labour-run council declared itself effectively bankrupt in September last year (Matthew Cooper/PA) (PA Wire)

Birmingham City Council’s plans for an annual 9.99% increase in council tax and £300 million of cuts have been described as a “double whammy of higher taxes and fewer services”.

A meeting of the authority was told the savings, including cuts to library services, were needed to secure £1.255 billion in exceptional financial support (EFS) loans from central Government.

The Labour-run council declared itself effectively bankrupt in September last year, after identifying equal pay liabilities estimated at £760 million, and is now said to be on a “narrow path to financial sustainability” dependent on budget cuts.

The budget-setting debate at Birmingham’s Council House comes a day after Nottingham City Council approved cuts to both jobs and services amid a reported £50m budget gap.

Quite simply, we must get our house in order, because the people of our great city deserve better

Birmingham Council leader John Cotton

Nottingham’s ruling Labour group said the budget was passed “under duress because there was no other option” and blamed central Government funding cuts.

Speaking during the meeting of Birmingham City Council on Tuesday, Conservative group leader Robert Alden said: “Lord Mayor, this is an important budget, it’s a budget that shows just how badly Birmingham Labour have made a mess of the council’s finances and how they haven’t got a real plan to fix that mess.

“Instead all Birmingham Labour have to offer is a double whammy of higher taxes and fewer services.”

Accusing Birmingham’s council leader and its cabinet of living “in a fantasy land”, Mr Alden added: “Since Birmingham Labour took control of the council twelve years ago, every time people look at their council tax bill, it’s gone up – car park charges have gone up.

“And yet despite all these tax and fee rises, Labour has still effectively bankrupted the council.

“Now to make matters worse, after over a decade of Labour rule in Birmingham, residents face a future where every time they go to the library they will find it closed, every time they visit a youth centre it will be shut.

For Brummies, the council is running out of time to fix its finances before all services loved by our city are lost

Birmingham Tory Group leader Robert Alden

“They will see parks no longer maintained, streets no longer cleaned, dumped waste not enforced, broken streetlights not repaired.

“When it rains we’ll all be reminded how Labour slashed the flood defence budget.”

Saying the council’s finances had been “smashed on the rocks” of a failed IT system roll-out, as the council ignored warnings about equal play claims, Mr Alden said: “For Brummies, the council is running out of time to fix its finances before all services loved by our city are lost.”

Birmingham City Council leader John Cotton apologised to the people of the city for the “unprecedented” cuts, telling councillors the “budget before council today is not the budget I entered politics to set”.

Mr Cotton said: “It is not a budget I ever envisaged for our city. Sadly however, it is a budget that reflects the significant challenges currently facing this council.

“Because the harsh reality is we must make cuts of over £300 million over the next two financial years in order to receive exceptional financial support from Government and to meet the challenge set by commissioners.

“As the report before us states, that is unprecedented in scale and, for that, I unreservedly apologise to the people and communities of our city.”

“The fact remains however that my task, as the new leader of the council, is to tackle financial and organisational challenges that have dogged this organisation for far too long.

“Quite simply, we must get our house in order, because the people of our great city deserve better.”

Mr Cotton said he was committed to putting the City Council back on track, with significant work still required to stabilise the IT system and “to close off once and for all our equal pay risk”.

“Progress is being made, and I want to place on record my thanks to members, to officers and the commissioners who are working tirelessly to resolve these critical issues,” he said.

But Mr Cotton said the mistakes made in Birmingham had “not occurred in a vacuum” and councils up and down the land were facing a perfect storm of smaller budgets but higher costs, leading to widespread cuts to waste collection, road repairs and leisure services.

He told fellow councillors: “We have sought to protect the most vulnerable, with the highest percentage of cuts coming in back-office functions rather than in the high-demand areas of adult social care and children and young families.

“In addition we have safeguarded things like well-being centres and school crossing patrols.

“Lord Mayor, I regret that council tax bills will increase by 9.99% and I know that the timing of this increase could not be worse, given the cost of-living crisis that has been exacerbated by reckless national mismanagement of the economy.”