A crisis long in the making
When Birmingham City Council issued its Section 114 notice in September 2023, effectively declaring itself unable to meet its spending commitments, the shock was felt far beyond the West Midlands. Britain’s second city, a £3 billion-a-year authority and the largest in Europe, had reached a fiscal cliff.
The warning signs had been flashing for years: a ballooning equal-pay liability, an expensive and delayed Oracle IT implementation, and an increasingly unmanageable budget gap. Years of austerity and governance failures had left the council exposed. By the time government commissioners arrived, they found, in the words of finance commissioner Chris Tambini, “no plan, no negotiations and no credible path” to stabilisation.
Yet, as the intervention enters its second year, a new debate has emerged, was bankruptcy inevitable, or was it a catastrophic misjudgment born of faulty data?
The battle over the numbers
Earlier this autumn, Dr James Brackley, an accounting scholar formerly of Sheffield University, published an analysis suggesting Birmingham’s finances were not as dire as portrayed. His contention was stark: that the council had overstated its equal-pay liability by hundreds of millions of pounds and understated its reserves by roughly £272 million. The implication, that Birmingham’s “bankruptcy” was unnecessary, drew support from more than twenty senior academics, who called for an independent public inquiry.
Commissioners Tony McArdle and Chris Tambini, however, have rejected that narrative as “ill-informed”. They argue that, in 2023, the council’s equal-pay risk was still escalating, its reserves were insufficient to cover liabilities, and its budget deficit was set to widen to £375 million. In their view, intervention was the only viable course.
Tambini is blunt: “If I had been the Section 151 officer, I would have issued that notice. The liabilities were still there and still growing.”
The truth likely lies between the two camps. Birmingham’s finances may have been less catastrophic than first claimed, but its governance and risk management were already broken. The Section 114 notice, though politically and economically painful, may have been the necessary shock to force structural reform.
Why a public inquiry still matters
The competing accounts highlight a deeper problem: the opacity of local government finance. Even seasoned analysts struggled to reconcile the numbers emerging from Birmingham’s Oracle system, which was plagued by delays and data inconsistencies. A full, independent inquiry would serve not to apportion blame but to establish facts, improve transparency and restore public confidence.
For Birmingham’s residents, now facing service reductions, asset disposals and tax increases, the stakes are high. A detailed public inquiry would clarify how such a large authority could misjudge its exposure and why early warnings were ignored. It would also provide a model for other councils under pressure from equal-pay liabilities, inflation and legacy IT problems.
There is precedent for such intervention. The collapse of Northamptonshire County Council in 2018 led to major governance reforms and the creation of two new unitary authorities. Birmingham’s lessons could be equally influential, particularly as several large metropolitan councils, including Nottingham and Croydon, face similar strain.
The case for optimism
For all the gloom surrounding Birmingham’s finances, the underlying economy remains remarkably resilient. The city continues to attract investment in advanced manufacturing, clean energy and life sciences. Major employers such as Jaguar Land Rover, PwC and BT have reaffirmed their long-term commitments, while its universities feed a steady pipeline of talent into the region’s innovation clusters.
Commissioners say they are “within touching distance” of restoring financial stability, with next year’s budget expected to be balanced without resorting to one-off asset sales. This would mark a significant milestone: a council living within its means, supported by new governance frameworks and a leaner operational model.
For investors, the reset may even be a turning point. A council forced to reassess its priorities, to focus on fiscal discipline, transparency and service delivery, becomes a more predictable partner for private capital. Regeneration projects in Perry Barr, Digbeth and around Curzon Street station are proceeding, supported by the city’s enduring strengths in connectivity and scale.
Rebuilding confidence, restoring pride
Birmingham’s story is not simply one of failure, but of reckoning. The intervention has exposed weaknesses in local government oversight but also created an opportunity for renewal. The arrival of a new chief executive, a reconstituted leadership team and stronger financial controls are already beginning to restore credibility.
Still, confidence, both public and investor, cannot be rebuilt on rhetoric alone. A transparent account of what went wrong is vital if Birmingham is to reassert itself as the engine of the West Midlands. A public inquiry would not hinder that recovery; it would accelerate it, drawing a clear line under the past.
The path ahead
The next 12 months will be decisive. If the council can deliver a balanced budget and complete its equal-pay settlement, government commissioners could begin to withdraw by 2026. That would allow local leaders to reclaim control, and responsibility, for the city’s financial destiny.
For now, Birmingham stands as a tale of how governance can unravel, but also as a case study in resilience. Its citizens, businesses and institutions have shown an extraordinary capacity to adapt.
Bankruptcy, or what passes for it in the public sector, was never the end. It was a reset. And in that reset lies the possibility of something better: a Birmingham that learns from failure, governs with discipline, and rebuilds its reputation as a place to live, work and invest, with renewed confidence and fiscal credibility.
