"Local government over the last decade has had more cuts than any vital department"

The Labour councillor for Telford, Shaun Davis, has blamed a decade of Tory funding cuts for driving Birmingham council, and other councils, into bankruptcy.

Birmingham City Council declared bankruptcy on Tuesday when it issued a section 114 notice, putting an immediate end to all new spending, with the exception of protecting vulnerable people and statutory services.  

Speaking to Andrew Marr on LBC, councillor Shaun Davis said the issue was not party political and predicted that all councils are likely to be affected, if they haven’t already, by a section 114.

“Local government over the last decade or more has had more cuts than any vital department, and local councils have been having to deal with that year in, year out,” said Davies.

“Birmingham is the eighth council since 2018 to declare a section 114, before 2010 just one council declared a section 114.”

Local government funding fell by 17.5% in 10 years, between 2009/10 and 2019/20, the Institute for Government think tank found. This then partially increased, however it was still 10.2% below 2009 figures in 2021/22.

“It’s as a result of the funding that’s been reduced by government over the last 10 years but also, the issues we are facing now, just to stand still and provide the services we are at the moment requires an additional £3 billion this year,” Added Davies.

“That’s because of things like contractual inflation going up, general inflation and staff pay. What’s difference here is the amount of demand coming through the door, together with all the other issues, is a perfect storm for councils.”

Davis emphasised that all councils, regardless of their size, geography or political control have been or will be affected by a 114 notice, with a number of councils currently on the brink of bankruptcy either this or the next financial year.

“This is not a party political issue for local government, we want to work with the government to find a long term financial sustainable funding model for local government so local services can be protected.”

However, GMB union have called the bankruptcy a “humiliating failure” by the council’s leadership, and accused the council of, “running up a huge equal pay liability bringing Birmingham to the brink.”

The union has supported council workers caught up in a pay inequality issue. In 2012, the Supreme Court ruled in favour of the mostly female Birmingham City Council workers over a pay inequality issue where a bonus scheme handed out in certain roles was found to have favouring those which were mainly taken up by men.

The bill to settle the equal pay claims has now racked up to £760 million. The council referenced the amount in their bankruptcy statement and said it does not now have the resources to fund the accrued equal pay liability.

Birmingham joins a growing list of councils declaring bankruptcy, including Thurrock, Croydon, Woking, Slough, Northampton and Hackney.

(Image credit: LBC / screenshot)

Hannah Davenport is news reporter at Left Foot Forward, focusing on trade unions and environmental issues

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