Three reasons for optimism over Birmingham's financial woes as government looks for 'reset'

A reset of the relationship between central and local government could be on the cards amid hope for the recovery of Birmingham City Council. Last year saw the council engulfed by a financial crisis and commissioners being sent in by the previous Conservative government to help turn things around.

In the year which followed, fears have erupted over this year’s unprecedented budget and the future of several services in the city including libraries, arts and culture, day centres and youth services. The first of the commissioners’ six-monthly reports, from this April, was published this week and set out the major challenges facing the council during its ‘long but narrow’ path to recovery.

In his response to the report, minister of state for local government Jim McMahon was optimistic about how the new Labour government could support councils as well as the ‘encouraging’ steps made so far in Birmingham. “I note that [Birmingham City Council] set a budget for 2024/25 and continues to work on achieving better financial management, which are positive signs,” he wrote.

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“I am grateful for the significant oversight and direction from commissioners that has been fundamental to this work. I also want to recognise the progress made by the council to date under the leadership of Coun Cotton and his clear and public commitment to resolving the challenges facing the city.”

So should Brummies have some hope that Birmingham City Council (BCC) can weather the storm? Here’s three reasons why that could be the case according to the government minister.

1) A new relationship with central government

Mr McMahon said that he was keen that the intervention moves quickly to a model “based around a more equal partnership with the council” so it’s increasingly able to lead its own recovery. “Local councils must be fit, legal and decent,” Mr McMahon wrote.

“This government is committed to achieving that, which will require resetting the relationship between local and central government and establishing partnerships built on mutual respect, genuine collaboration and meaningful engagement. This will ensure residents up and down the country have well-functioning local authorities with a set of statutory services they deserve.”

He added he was committed to working with Birmingham City Council and the sector to understand what further supportive options central government can provide. In his own response to the commissioners’ report, council leader John Cotton said they continue to engage “constructively” with the new government.

"Like councils across the country, we are awaiting both this month's budget settlement and a local government finance settlement later in the year which will set out a one-year emergency package of support for local councils,” he said. "The government is also committed to a multi-year settlement following next year’s spending review which will give councils much needed clarity and allow us to plan for the future.”

2) New managing director

Another reason for hope, according to McMahon, was the appointment of Joanne Roney as managing director at the council. “I trust she will work with Coun Cotton, the cabinet, officers at the council and commissioners to improve the culture and governance of the organisation and shift the focus to growth opportunities in the city,” he said.

Ms Roney grew up on a council estate in Shard End and joined the council as an apprentice aged 16-years-old. She went on to hold executive director positions at two UK local authorities, going on to be chief executive at Wakefield and most recently joined Manchester City Council in 2017, again as chief executive.

Coun Cotton added: “We face another very difficult budget, and it remains clear that the pace of change must further increase, as further savings are identified, and we transform services. Our new managing director Joanne Roney is focussed on that challenge and there will be no let up as we work together to get the council back on track."

3) Growth opportunities

The minister said growth opportunities must also be maximised. He therefore urged the council to work in partnership with private and public partners in the region, including new Labour mayor Richard Parker, to help drive skills, jobs and opportunities.

Amid the financial woes in Birmingham, Coun Cotton has previously pointed the finger at “14 years of neglect from the previous Tory government" while Conservative politicians have highlighted the mistakes made by the Labour administration at the council.

In a statement issued this week, Conservative leader at BCC Robert Alden said: “The Labour leadership need to finally accept their failure and start decisively acting to fix the council’s finances and improve services for residents.”

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