Bankrupt Birmingham

On 5th September 2023 Fiona Greenway, Interim Director of Finance (Section 151 Officer), Birmingham City Council issued a section 114 Notice - bankruptcy – under the Local Government Act 1988. The 151 Officer is obliged to do this when the local authority can no longer meet commitments for the existing (2023/24) and the following financial year. The current year's deficit being £87m. This followed an announcement in July of outstanding historic liabilities of up to £760m from the Equal Pay claim won by 5,000 women Council workers at a 2010 Employment Tribunal. At the time, the Council paid out almost £1.1 billion. The outstanding liability of £760m is said to be increasing monthly, and currently stands at £14m. The implementation of a new computer system was also expected to cost a further £100m. The Council had also heard from the Union's lawyers that further Equal Pay claims would be issued shortly.

Shock, anger and disbelief has followed, and finger-pointing between elected councillors and their officers:

• Who knew what and when?
• Is this year’s budget legal?
• Why was a single status rise given a zero rating?
• Why have the last three sets of accounts not been signed off?
• Who really runs the Council - and who works for who?
• Who was asleep at the wheel?
• How can such a big financial hole escape both Executive and Scrutiny
• Does the “revolving door” culture of too many interim managers and directors mean nobody has a handle on the fundamentals?
• Is the city being failed by its politicians?
• Who is to blame, and who is gaining political capital from this mess?
• Why can’t Councillors get basic information from officers?
• Should heads roll?
• What will a judge-lead inquiry reveal?
• What part does the decade-plus of Government austerity cuts play, with 86% of the Council facing projected budget gaps (Unison FOI research)?
• So much for the Commonwealth Games launching a “Golden Decade”!
• Should the games have gone ahead when the Council was failing to meet the basics, like the Decent Homes Standard on 23,000 (40% of its stock) council houses?
• Can Birmingham look after its own affairs with Government Commissioner taking over for five years bypassing local democracy - just like the City Leader being decided by Labour Party HQ.
• The City’s cultural assets targeted for sale to plug the hole, with only rich property developers benefiting.
• Citizens of Birmingham mobilising to save the city's the cultural jewels fire sale - https://savebirmingham.org/

Rest assured, there will be a reckoning. This is too big an error for it to be simply forgotten by the time of the next Council elections in less than three years’ time.

The implications of bankruptcy will be far-reaching and devastating for the people and communities of Birmingham, let alone the thousand-plus employees at the Council likely to lose their jobs. You know how deep it cuts when young people can be overheard on the top deck of the number 11 bus wondering how this is going to impact them on top of COVID and the cost-of-living crisis, alongside elders worrying if their lunch club will be shut down. The city already has inequality disparities, especially with regards to poverty and race inequality across its neighbourhoods and the full range of service the Council delivers. What will be the impact of the bankruptcy on them and will the outcomes for everyone be fair?

At the ‘Rescue Plan’ Council meeting on the 25th; September the Leader of City Council, John Cotton said "Sorry" to the people of Birmingham and the Chief Executive, Deborah Cadman announced "that the recovery will involve hard choices and it will almost certainly result in a different organisation". What will these "hard choices" be, will they be just left to the politicians, the incoming commissioners and what real say will the people of Birmingham and communities have to influence?

Some would say running a local authority isn't just about managing budgets; it's about serving the community with unwavering accountability and striving for excellence in every service delivered. This is true; but having a budget to do it is essentially the bottom line in having resources to enact policies. Birmingham City Council's current predicament is a glaring reminder of the repercussions of mismanagement and a lack of genuine commitment, despite bold statements. As a former employee of the City Council of over twenty years - working at both a junior and chief officer level - and a resident of the city, here’s my take on what’s at stake.

The Abandonment of Equality

At the core of this are women not being paid what they were due, even after the single status cases had been proven by their unions. However, the City Council continues to try and prove it is right, at all costs. So much for the Council’s equality values, which supposedly have been paramount since the 1980’s. The toxic culture of racism revealed by the Labour Councillors of colour's anonymous survey is a case in point.  As is the recent Employment Tribunal (ET) ruling of racial harassment and direct racial discrimination against the Council, with no action taken on those who have been instrumental in these acts. Similarly, many parents have also experienced this ‘holier than thou’ attitude while fighting to get their children’s special educational needs and disabilities (SEND) met. As parents of three, now grown up, SEND children we had to go through numerous SEND tribunals, which we won every time. The Council then had a slogan, “Improving on Previous Best”, which required learning from what happened. This never happened and was essentially performative deflective branding and bean counting. Not dealing with core issues thus over the decades leading to Government intervention.

The Vice-chair of BRIG, Siobhan Harper-Nunes and myself were invited to the Black Workers' Group Annual Meeting last year. A key agenda item was the ethnicity pay gap - with a Senior Human Resources Manager presenting.  With reference to the Single Status case won by women, we asked if the authority had considered the risk of a future claim by workers on the ethnicity pay gap and if a potential claim stacked up would they be prepared to settle without a costly protracted dispute? The reply was a firm "NO". So, much for the Council being a learning and improving organisation. The only time the Council enacts change is when it's back is up against the wall: be it a financial firestorm or the threat of Government intervention as with SEND and potentially with housing on the horizon.

Following the ET ruling and the issuing of bankruptcy; many Black and Asian employees have been in touch about the discrimination they face. Very few are now prepared to raise their cases formally for fear they will now be targeted as part of the planned job losses. There is a culture of fear at the Council, which will essentially keep inequalities suppressed. The lack of trust from both its employees and communities is a failing the Council will take a long time to recover from. Part of building back the lost trust will be to genuinely demonstrate that inequality gaps don’t increase further based on recovery options, which will need thorough testing. The Council have said they are signed up to Section 1 of the Equalities Act:

“An authority to which this section applies must, when making decisions of a strategic nature about how to exercise its functions, have due regard to the desirability of exercising them in a way that is designed to reduce the inequalities of outcome which result from socio-economic disadvantage. The Council will need to lay out in clear terms how this will be implemented with regard to recovery options  under consideration to both communities and employees.

The Loss of Public Trust

Local authorities, although publicly funded, are, at their core, entrusted with the welfare of their communities. Flourishing requires the utmost dedication, transparency, and genuine commitment from leaders, managers, staff, and the community itself. Vigilance in monitoring production, ensuring quality assurance, and promptly responding to community needs are non-negotiable.

The Tragic Disconnect

In Birmingham's case, the crux of the problem lies in leadership that remains physically and emotionally detached from the very community it is meant to serve. When those in power are situated miles away and only appear when politically convenient, the entire organisation suffers. Quality assurance checks become sporadic, financial oversight becomes slipshod, and the council's health deteriorates. Adding insult to injury, external consultants - or 'interims' - are routinely summoned to address issues already identified by front-line officers. These consultants, often appearing only virtually, command staggering fees, sometimes surpassing the CEO's earnings. Meanwhile, the dedicated staff who highlight issues and offer solutions are ignored, perpetuating bias and discrimination, ultimately demoralising the workforce.

The Vicious Cycle of Neglect

This narrative persists when 'interims' offer only short-term fixes but “abandon ship” when the going gets tough - or are periodically replaced on political whims. This revolving door approach has endured for a decade, while elected Councillors - who should be the taxpayers voice - seem to fade into obscurity after election campaigns. Where is the dedication for accountability? Why have they fallen silent in the face of mounting challenges? 

The Cry for Accountability

It is infuriating to witness Councillors and MPs, entrusted with safeguarding public funds and community interests, being shackled by party whips and intimidated by officers. It's now time we demanded more from our leaders. Residents expect far more accountability from their Councillors. When they fail, they too should pay a price and not - like the bankers-  just be let off. Where wrongdoing is found, be it officers or Councillors, they need to be removed.

The Call for Change

The solution is within our grasp. The chasm separating Councillors and senior staff, whether intentional or not, deafens the cries of our front-line heroes. We must hold our elected representatives accountable for their actions or inaction. Their high salaries, pensions and perks must mirror only their unwavering commitment to public welfare, not their allegiance to party politics or personal projects, as we saw unfolding during the Commonwealth Games.  

The Family Silver Fire Sale

The recovery plan has not yet been revealed - all we’ve been given is a plan for the recovery plan! An impending fire sale of Council assets is being drip-fed to the media - especially its stake in Birmingham Airport and various cultural assets. These will be fought against by communities, just as the job and service cuts will be by the unions. None of this is the fault of Birmingham people, but solely the Council's mismanagement. It is imperative that a range of recovery options are put to and invited from Birmingham people: it is our lives, our families and our communities that will be impacted. This can’t just be left to Officers, Councillors and Government Commissioners. If there ever was a time to do things differently, it is now.

Misguided Government Strategy; All you hear from Government is you should manage your affairs and we gave you so much more. The fact remains Council's have been cut to the bone add latter.

A Beacon of Hope

Birmingham's mounting liabilities stand as a stark testament to leadership's oversight. We must demand answers and change. The residents of Birmingham deserve far better than this. It's time to replace complacency with passion, apathy with accountability, and empty promises with meaningful change and action. Birmingham City Council's current state is a clarion call for local authorities across the nation. While government funding plays a role, the core issues emanate from disengaged leadership, a lack of genuine commitment, and the corrosive influence of party politics. It's time to rekindle the passion for public service and demand accountability from those entrusted with our communities' well-being. Birmingham merits leaders who prioritise community needs. This is not to say the city should not have ambitions, rightly we should, but not at the detriment of both communities and core service employees, whose rights and fair treatment need to be respected and delivered on. The Council can thrive again, but in a deep and meaningful way and not a pretence, with issues that matter being constantly swept from view hoping they’ll go away. Deal with what needs sorting. 

The intervention of Government Commissioner may indeed be what's required for a total reset at the Council, given this total failure, but it will need to be done with the consent of the people of Birmingham.