‘We know it will not be easy’ - Birmingham City Council unveils debts as it bids to save £200m

Birmingham City Council’s latest financial position has been identified in a new report published ahead of a cabinet committee.

The report shows the huge budget shortfall that the local authority is facing over the next two years. It also states that the council must find savings of £200m by 2026.

Next year, the council expects to see a gap of £164.8m in its finances, which will rise to £177.1m in 2025/26. As a result it is looking to save £165m in 2025/25 and deliver an additional £35m of savings in 2025/26.

In September the council issued two Section 114 notices, formal admissions it was effectively bankrupt. The reasons included equal pay claims of up to £760m and an £80m overspend on a troubled IT system.

The council’s cabinet has been asked to endorse the savings targets and commit to delivery of the budget with the committee meeting taking place on November 14.

A spokesperson said: “Budget proposals will be developed in line with the 2024/25 budget setting process, and the public will be engaged as part of this process.” The cabinet report can be found here.

‘We know it will not be easy’

Cllr John Cotton, leader of Birmingham City Council, said: “We need to be absolutely transparent about the situation the council is in and this report confirms the figures we have already made public in terms of the budget shortfall we face after a decade of cuts and recent rampant inflation.

“The cabinet and leadership team are focussed on working with commissioners to meet these challenges and get the council on a road to improvement. We know it will not be easy and we will have to make very difficult decisions about where money is spent and invested – and what we can no longer afford to do.

“We will continue to be open about the position we are in, however difficult those conversations will be, and what it means for the city.”