Labour Led Birmingham Council Goes Bankrupt

Absolutely disgusting that tax payers money has been squandered by a labour council yet again.

Labour have done the same to Nottingham , a Half demolished Shopping Centre greets you, for the past few years …the company that was going to build another went bust , this is after Council lent money to them , The Council also thought they would start up a new Energy Company with our money , That went Bust too .
The Labour Council are now selling off its assets, Buildings and the like .
The goverment said they would put them under special measures if they couldnt balance the books

3 Times its applied for Goverment Grants and 3 times they have been refused , But Micheal Gove said , keep trying you might be in with a chance next time . haha… really
Giving the Labour Council money is like money down the drain .

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Don’t let the right wing press fool you into thinking only Labour-led councils can become broke.
I remember that Conservative-led Northamptonshire Council also had to issue a Section 114 Notice in 2018.
Quite a few other Councils have done the same thing since then - perhaps there may be common denominators, other than which party has the majority of council seats?

When it happened to the Tory-led Council of Northamptonshire, the Local Government Association (LGA) warned that years of shrinking budgets, coupled with increased pressure on social care and child protection services, would leave many councils “close to the edge”.
The LGA estimated then that councils in England faced an overall funding gap of £5.8bn by 2020.

With that background, plus the current cost of living crisis, any unexpected pay-outs for historic claims of large amounts, such as the decade old unequal pay claim for Birmingham Council, is more likely to push Councils “over the edge”

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I think Croydon was another Conservative council that went bust too.

Maybe its time to centralise government spending again.

Today, Labour-led Birmingham Council declared bankruptcy, becoming the latest local authority to issue a Section 114 notice. It follows on from Conservative-led Croydon council in south London declaring bankruptcy three times in two years, Tory-led Thurrock (1) in Essex becoming the largest bankruptcy in local government history last year , and a string of others including Slough, Woking, and Northumbria County Council.

In 2018, Tory-led Northamptonshire Council (2) collapsed, becoming the first council to do so since the London Borough of Hackney in 1998. After surveying councils, the Local Government Association has warned that around 90 per cent of councils were using dwindling financial reserves to keep themselves running, and 26 councils are estimated to be at risk of bankruptcy in the next two years.

Politics, of course, plays a role. A central government governed by one party is usually less sympathetic to what they might consider profligate spending or financial mismanagement by a local government controlled by an opponent. Similarly, it would reflect poorly on the party of government if one of its flagship councils were to fail. In 2017, the Tory leader of Surrey County Council was outspoken about the financial challenges faced in an area in part represented in parliament by the then Tory chancellor, Philip Hammond. his culminated in a plant to allow Surrey to raise council tax by 15 per cent, three times the limit set by central government. Under Tony Blair’s government, meanwhile, Labour-led Hackney Council was bailed out to the tune of £25m.

(1) Man bought private jet with borrowed council money - BBC News

31 July 2023

Leaked documents reveal how Liam Kavanagh used Thurrock Council’s money to buy luxury goods, including a yacht and a private jet.

The Conservative-led council has been made effectively bankrupt after investing £655m in Mr Kavanagh’s solar farm business.

Thurrock is one of a number of councils that have got into financial difficulties since the coalition government gave local authorities more freedom to raise funds and invest in 2011. Woking, Slough and Croydon have all been forced to stop all non-essential spending after losing public money on risky investments.

The Audit Commission - a spending watchdog that stopped councils taking too many risks - was abolished in 2015 by a Tory government.

Thurrock Council started investing cash with Mr Kavanagh’s business Rockfire the following year. The idea was that the council would get regular interest payments from the profits and its cash would be safe because it was secured against the value of the solar farms. But the interest payments stopped after Mr Kavanagh wound up his companies and the estimated value of the solar farms is less than the council thought.

Administrators are now selling the solar farms and Thurrock is facing a £200m shortfall on its investment. The council has been forced to cut services and put up council tax.

(2) Tory-run Northamptonshire county council bailed out by government | Local government | The Guardian

Thu 29 Nov 2018

The government has in effect bailed out Tory-run Northamptonshire county council after giving it unprecedented permission to spend up to £60m of cash received from the sale of its HQ on funding day-to-day services.

The highly unusual move – accounting rules normally prevent councils using capital receipts in this way – means the crisis-hit authority is likely to escape falling into insolvency for the third time in less than a year.

Opposition councillors called it a political move to save ministers from having to directly bail out the council. Labour group leader Mick Scrimshaw said: “It is clearly politics. The Conservative government did not want the political embarrassment and for that reason they have been allowed to use these capital receipts.”

Northamptonshire declared itself effectively bankrupt in February after it realised it could not balance its books. It declared insolvency again in July after a review revealed it had understated the extent of its financial problems. It must make good a £70m deficit by the end of March to avoid insolvency for a third time.

Councils, like businesses, can be forced into bankruptcy for one or more of several reasons.

I am a Birmingham resident and council tax paye, to be honest they could not oragnise there elbow to work in conjunction with their arm bone. To top it all the leader of the council has gone on holiday

Worryingly as it stand I believe councils can only increase the local tax by a maximum of 5 per cent without a referendum. However, due to its perilous financial situation, Birmingham council could ask the government to allow it to increase it above the 5 per cent level without the need for a local poll. and if any of you recall Birmingham council was in 2021 named and shamed in parliment for moving the National Express Depot in Perry Barr was it 300 metres and spending 16 million. Now the leader gone on holiday says it all really

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They have spent millions satisfying retrospective equality seekers, what did you expect?

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Rather than bringing women’s wages inline with blokes wages, why didn’t they lower the men’s wages? Or at least find a happy medium so the bill wouldn’t have been so much.

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I would have asked that question, but got bored of just banging on.

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They should have asked us Spitty…
:sunglasses:

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They would not have understood we did not require any sort of consultancy fee.

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there should be no such thing as a mans wage or a womans wage
just a wage for the job, no matter who does it

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I totally agree Crabby. However, that is how society thinks today, and not how they used to think. So we must accept that it takes time to adjust society accordingly, and making a company bankrupt trying to keep up with trends isn’t the way forward, many people will suffer because of a silly knee jerk reaction and pandering to the whims of protest groups without proper planning.

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The money that council wastes is incredible.
I bet they still have a big bonus.
What have they done with all those speeding/parking/bus lane fines,they raked it in big time last year.

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Recent council crashes. These have declared bankruptcy:
2018 - Tory led Northamptonshire
2021 - Labour led Slough
2022 - Tory led Thurrock
2022 - Tory led Croydon
2023 - Libdem led Woking
2023 - Labour led Birmingham
Plus currently about 30% of councils are considering declaring bankruptcy - with no one party being the main cause of the problem.
The title of this thread tries to indicate that being Labour led is the root of the problem. In fact the root of the problem is how local authorities are funded and regulated. Not the political leaning of the party that leads the council.

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This council going bust issue is a huge problem across the country.

There is a table with the worst 20 debt to income ratios and the most financially prudent has 6 times the debt of their annual income. The worst, 86 times.

i think equal pay [which i of course agree with] was not bugeted for…

That has affected quite a few councils but there seems to be a few who decided that suspect property developments were the way to put money in their depleted funds. Some of these have gone badly wrong.

Tory-led Derbyshire County Council stopping non-essential spending due to £46m budget black hole

The budget gap comes despite £29.6 million of council reserves being used to balance the books, and after £55m was used to balance the council’s budget in the last financial year.

In a joint report published, Emma Alexander, managing director at the council, and Mark Kenyon, director of finance and ICT, said: “If the forecast overspend is not addressed, the Council’s General Reserve balance will be depleted. Therefore, the Council is taking a number of actions to mitigate the overspend.”

The report blamed inflationary and demand pressures, particularly in adults and children’s social care, which combined are responsible for more than £20 million of the overspend.

The council also said the expected, nationally-set pay award for 2023-24 was a “significant financial pressure”, but that using reserves to balance budgets meant they had “depleted significantly”.

Its reserves have been left at around £28 million, meaning the current overspend would “more than deplete” what it has left to pay for emergencies and other unexpected expenses, the report said.

Meanwhile, the council is attempting to save £16 million this financial year, as well as a further £12 million brought forward from previous years, as it attempts to deal with funding cuts.

AFAIK, not a profligate authority but now one which is another victim of circumstance.

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i couldnt believe it when our council got rid of all its nursing homes, due to cost
whats next? the hospitals?