Opposition leader asks Chancellor to write off council’s debts
Government must write off the estimated £4bn of debt racked up bankrupt Birmingham city council, a Tory councillor said today.
The call comes two years after the council issued a Section 114 notice, effectively declaring itself insolvent and able only to perform base-level services.
Robert Alden, Conservative councillor for Erdington and Leader of the Opposition at the embattled local authority, said decisive action is needed.
He has written to the Chancellor of the Exchequer, Rachel Reeves, calling for the Government to effectively refinance Birmingham City Council by scrapping or reducing interest rates on the council’s Public Works Loan Board debt.
This would alleviate the severe financial pressures facing the council, making debt repayment affordable while safeguarding essential services for residents.
Cllr Alden highlighted the forecast £4bn loan debt by 2028, and £277m a year treasury management costs to service this debt.
He remarked on a council overspend in 2024/25 of £182m, and cast doubt on whether the council’s asset sell-off, targeting £750m, would raise sufficient funds to get the authority out of its financial jam.
He said: “The council’s woes are a direct result of Labour’s mismanagement, and the Government can act to prevent the continued sale of public assets and stripping of services by helping Birmingham City Council effectively refinance its debt.
“The Labour administration here in Birmingham has failed to fix the council’s budget. As the Opposition, we are stepping up to offer the Government a solution that would enable the council to get back on its feet, clean up the city and give residents a fresh start, unleashing Birmingham’s full potential”.
Labour response: ‘14 years of Tory austerity’
A Birmingham Labour spokesperson said: “Under John Cotton’s leadership, Birmingham City Council has taken decisive action to bring its finances back under control.
“Now, working with the Labour Mayor Richard Parker and the Labour Government, the council is delivering for the people of Birmingham.
“After 14 years of Conservative austerity, which was cheered on by Robert Alden and the Birmingham Tories, the Labour Government is providing the financial security that local councils across the country need.”
