The news that Birmingham Council have had to issue a s.114 notice, effectively putting a halt on all non-essential spending, was widely expected by those in local government circles.
Despite this, it would always be big news given its status as the largest local authority in Western Europe, serving approximately 1,144,900 residents. Birmingham now has the dubious ‘honour’ of joining a growing number of councils who have had to take this extraordinary step in recent years, the other most recent examples being Thurrock and Woking. More worryingly perhaps is the estimated 26 or so other councils believed to be on the brink of having to declare a s.114 as well many others currently solely relying on their reserves to prop up their budgets.
Local government finance has faced an unprecedented challenging time in the last decade – not only has their revenue support grant from central government all but ceased, inflation, soaring social care demands and the knock on impacts from COVID still being felt are pushing more and more councils to breaking point.
Interestingly, Birmingham faced a unique challenge regarding the longstanding legal challenges it has faced over job harmonisation and equal pay, having lost an employment tribunal case in 2010. The political leadership team is also new, having only been in place since May following the ousting of the previous Leader and Deputy by a damning internal report conducted by the Labour Party. Whilst no Leader ever wants to be in this position, especially this fresh into the role, in my view they should be commended for biting the bullet and taking this difficult step to hopefully enable the authority to be on the road to recovery faster.
Given this, one would hope that the new leadership team are given the time and importantly the support from central government, to get the authority back on an even financial keel – however the reality is that it is likely nothing is off the table – from the imposition of government commissions to even the potential for the more radical break up of the city council, at DevComms we will be watching and following the news closely.
If you would like to find out more about a s.114, what this means and any implications for you, please contact our Head of Public Affairs, Pavitar K Mann.