Council leader declares Birmingham no longer 'bankrupt' as £130m boost unveiled

Birmingham City Council's leader has declared that the authority is no longer "bankrupt", as it published budget proposals that include an extra £130 million for frontline services.

Councillor John Cotton made the announcement on 3 February, almost two and a half years after the council issued a Section 114 notice in September 2023, effectively declaring that it could not balance its books.

What a Section 114 notice means

A Section 114 notice is issued by a council's chief finance officer when the authority cannot set a balanced budget. It bans all new spending except on essential services, and in Birmingham's case it led to government-appointed commissioners overseeing the council's finances and running of the authority.

The council says it is no longer under that notice, and that the proposed balanced budget for 2026/27 has the backing of its statutory officers, including its chief finance officer, known as the Section 151 officer, and the commissioners.

£130m for services

The budget proposals include an additional £130 million for council services, with a focus on cleaner, safer streets and better local services. They were due to go to cabinet on 10 February and to a vote of the full council on 24 February.

"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," said Councillor Cotton.

He said the council had closed a £300 million budget gap and tackled its equal pay liabilities, the claims from mainly female staff who were paid less than colleagues in comparable roles, which were a major cause of the crisis.

"We are back in the mainstream of local government," he said, describing the moment as "a significant moment in the council's recovery", achieved through the work of councillors and officers supported by the commissioners.

Difficult decisions ahead

Councillor Cotton said the council would continue to take difficult decisions, and that he was determined "the mistakes of the past will not be repeated". The recovery since 2023 has involved deep spending cuts, rises in council tax above the usual limit, and the sale of council assets.

He said the council would now step up its work with the regional mayor, Richard Parker, and with the Government to invest in communities, "delivering the homes, jobs and services that the people of this city deserve".

For residents, the change should mean an end to the tightest restrictions on council spending, although the council's finances remain under close scrutiny and the commissioners' role continues while the improvement work goes on.