Birmingham City Council is ‘no longer bankrupt’, says leader

Birmingham City Council says it is no longer bankrupt and will invest an extra £130m in frontline services.

It comes almost two and a half years after the council issued a Section 114 Notice declaring effective bankruptcy.

Now the authority says it has closed a £300m budget gap - but still needs to find £93m of cuts in the next budget.

In budget documents made public ahead of a council cabinet meeting next week, the authority states its financial situation for 2026-27 will be “balanced”, with services set for £130m investment.

Since autumn 2023 and the emergence of a vast financial black hole linked in part to equal pay liability, residents have faced service cuts and a 17.5 per cent council tax rise over the last two years.

On Tuesday the council said it was no longer in such dire straits, but a maximum tax hike of 4.99 per cent was still planned.

Council leader Cllr John Cotton said: "The council is no longer under a Section 114 Notice.

“Thanks to the decisive, tough action we took to get the council back on track, the ‘bankrupt Birmingham’ tag is now a thing of the past.

"This is a significant moment in the council’s recovery and is down to the sheer hard work that has been undertaken here in Birmingham by members and officers, supported by commissioners.

"We are back in the mainstream of local government.  We have closed a £300 million budget gap, we’ve tackled our equal pay liabilities, and we are getting to grips with improving the services that the council provides for the residents of Birmingham.

"This is an important milestone in our improvement journey and we will continue to take the difficult decisions required to be the council the people of this city deserve.

“I'm determined that the mistakes of the past will not be repeated, as we drive further efficiencies to deliver better services and value for money for council taxpayers.”

The proposed budget will be discussed at Cabinet on 10 February, before councillors vote on the proposals at Full Council on the 24 February.