Money Wellness
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calendar icon07 Sep 2023

How does Birmingham City Council’s financial woes affect the people living there?

Birmingham City Council effectively declared itself bankrupt this week by filing a Section 114 notice and immediately stopping all spending except on essential services.

The council has blamed £760 million of equal pay claims, the expenses of a new IT system, and years of funding cuts for its financial problems.

It now has 21 days to come up with a plan to find a way of funding its £87 million shortfall.

Birmingham City Council is the 7th local authority to issue a Section 114 since 2020.  And it’s not the only local authority facing a difficult financial future, with several others reported to be teetering on the brink.  

What does it mean for Birmingham residents?

Under Section 114, funding remains in place for statutory services for vulnerable people. The services protected include:

  • Education services
  • Child safeguarding and social care
  • Adult social care
  • Waste/bin collections
  • Planning and housing services
  • Maintaining roads
  • Library services

While these services will still be maintained, there’s likely to be cuts in areas such as street cleaning, parks and maintenance, leisure, children’s services that aren’t social care related, libraries and even the frequency the bins are collected.

There’s also uncertainty about whether popular events like the Christmas Markets can go ahead and it looks unlikely that the 2026 European Championships will now be held in Birmingham.

Residents may also face rises in their council tax in the coming year.

What is a section 114?

A section 114 notice is a public notice that declares there’s an issue. To issue a Section 114 means the council is not allowed to make any new spending commitments and must meet within 21 days to discuss what to do next and examine all the options available to them.

Who are the other councils that have filed a Section 114?

Until 2018, Section 114 notices were very rare. However, since 2000, Hackney, Northamptonshire, Croydon, Slough, Thurrock and Woking have all effectively declared themselves bankrupt.

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

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