What crisis-hit Birmingham council's future budgets could look like amid recovery hopes

Birmingham residents have been offered a glimmer of hope as the city council revealed it wants to move away from service cuts in future budgets. After declaring itself effectively-bankrupt, the crisis-hit council approved a budget which included a huge wave of cuts earlier this year - sending shockwaves across the city.

Libraries, cultural grants, bin collections, Home to School transport, graffiti removal, services for young people, highways maintenance and much more were all impacted by the Labour-run council’s cuts and ‘reviews’. But a new report published ahead of a cabinet meeting suggested the short timeframe that budget was set in limited both the “engagement and creativity” that could have gone into the process.

Council leader John Cotton said lessons had been learnt while Coun Rob Pocock acknowledged they had to “rush” to settle the budget for 2024/25. Looking ahead to next year’s budget, Coun Cotton said: “We intend to shift the savings focus towards efficiency improvements and service transformation rather than simply cuts and service reductions.”

READ MORE: Vulnerable older teens to bear brunt of Birmingham City Council cuts as parents told: 'Pay more'

These would be driven through ‘deep dives’ and engagement with staff, partners and trade unions to develop saving ideas over the coming months, he said. “There continues to be significant financial challenges for the council, highlighted by the £143.7 million budget gap for 2025/26,” Coun Cotton continued.

“£76.3 million of savings were presented for 2025/26 during the current year’s budget setting process so full proposals must be developed for these savings alongside accelerated work on the remaining £67.4 million. There’s clearly much hard work to be done but we are making the first steps on that road back to financial recovery.”

The report, by director of finance Fiona Greenway, adds: “The majority of the savings proposals for 2024/25 were related to the reduction of services rather than efficiency and transformation of service delivery. For future years, savings must focus on the transformation of services, cross-cutting savings and delivery of a leaner organisation.”

‘The council must transform’

Government commissioners, who were sent in by Levelling Up Secretary Michael Gove to oversee the council’s path to recovery, have told the council it should target that 80 per cent of savings be generated by “efficiencies”. “To reach this level of efficiencies, all aspects of the current budget must be reviewed and all parts of the council must be encouraged to transform and adopt new ways of working,” they said.

Coun Roger Harmer, Liberal Democrat group leader at the council, supported the commissioners’ target but hoped they would be genuine efficiencies - rather than “disguised cuts or inappropriate centralisation". He continued: “By inappropriate centralisation I mean cutting out all the local management and deciding things centrally which is one of the causes of all the problems this council has got into.”

Conservative group leader Coun Robert Alden added: “The reality is if that’s going to happen in next year’s budget, the work needs to start now. It’s too late to get to February next year and then say we want to do efficiencies.

“Over the last few years, all the opposition groups have put forward ideas that would enable the council to be able to protect frontline services.”

In response, Coun Cotton said the point about wanting genuine efficiencies and service transformation was “well-made” and they were “broadly in agreement” on where the council needed to be. On work needing to start now, he continued: “We will certainly be looking at all ideas that have come forward, including those from opposition members as well.”

The council's financial predicament is down to Birmingham-specific issues, such as an equal pay fiasco and the disastrous implementation of a new IT and finance system, as well as the rising demand for services and funding cuts. Coun Cotton has previously criticised the Conservative government and argued councils across the country faced a perfect storm of smaller budgets and higher costs.

Conservative politicians have pointed the finger at the mistakes made by the Labour council administration, with Prime Minister Rishi Sunak insisting the authority had mismanaged its finances.

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