Cash-strapped Birmingham City Council facing commissioners’ intervention – Gove

Michael Gove has outlined plans to appoint commissioners to take over Birmingham City Council and to launch an inquiry into the cash-strapped authority. The Communities Secretary told MPs that he was satisfied the council is ‘failing to comply with its best value duty’ after it effectively declared itself bankrupt by issuing a section 114 notice. Mr Gove said the commissioners would be able to exercise certain functions as required, including on financial governance, and the council would be expected to prepare and agree an improvement plan within six months. I have now informed the council that I am minded to implement the package that I have set out today to protect the interests and services of the people of Birmingham The minister added a local inquiry would consider the ‘more fundamental questions around how Birmingham got to this position’ and options for how it can become a ‘sustainable council’ in future. Mr Gove has written to the council to explain his intervention proposal and the authority has five working days to make representations. The council has been grappling with an equal pay liability, which has grown over several years. It is now estimated to stand at around £1 billion and is increasing by millions of pounds per month. It is also facing an in-year financial gap in its budget, which is currently in the region of £87 million, and is having to spend around £100 million on fixing errors in the implementation of a new IT system. Making a statement to the Commons, Mr Gove said: ‘I judge that the scale and nature of the failings at the council, its precarious financial situation and its failure to provide sufficient assurance to Government that it is taking adequate action to address these issues are all highly concerning. ‘I acknowledge the council is working with the Local Government Association on its own proposals on improvement and I’ve met with the leader of the council to hear his plans. ‘But, in accordance with the legislation, I have now informed the council that I am minded to implement the package that I have set out today to protect the interests and services of the people of Birmingham, and I’ve given the council five working days to make representations on the proposals I have set out today.’ He added: ‘It is important that we all get to the bottom of how we found ourselves in this position and that is why as well as sending in commissioners, I’m also making it clear that we need a local inquiry which can look at all of the deep questions – including assessing the council’s ongoing management of issues which were identified in the Kerslake review in 2014.’