Birmingham council was probably never bankrupt - accounts expert

Birmingham city council was probably never bankrupt and the decision to issue a section 114 notice two years ago was "based on unaudited and incorrect information", accounting experts have claimed.

- Neha Gohil

The Labour-run council issued a section 114 notice in September 2023, in effect declaring itself bankrupt, which triggered a wave of spending cuts and plans to sell £750m worth of assets. This prompted the government to appoint commissioners to run the council for five years.

At the time, council leaders blamed a £760m bill for equal pay claims, problems installing a new IT system and £1bn in Tory government cuts over the previous decade.

However, having made a fresh analysis of the council's 2022-25 accounts, James Brackley, a lecturer in accounting at the University of Glasgow, claims the council underestimated its reserves position by more than £1bn.

The council's 2022-24 accounts, which were published in July this year after delays, show the council had £784.7m in general fund reserves - from which most services are funded as of March 2024. In November 2023, the council forecast the 2023-24 reserves to be -£677.9m.