The multitude of mistakes and ‘mismanagement’ behind Birmingham City Council’s financial woes and the impact
on residents are laid bare in a damning new report. Errors and failings were rife across the council ahead of its de
facto bankruptcy, says the report from external auditors Grant Thornton.
The ‘crippling’ failed implementation of a new resource planning IT system, dubbed ‘Oracle’, a seriously
mismanaged bins service triggering more equal pay claims, inadequate housing services, failures in services for
children and families with special educational needs and disabilities and the regular raiding of reserves to cover
overspending all led to the council’s financial disaster, the report indicates.
A long standing failure to eliminate discriminatory pay practices was a major issue. Poor oversight of the
£500m Perry Barr Games Village housing scheme, which has made a massive loss, also contributed. “It is not
appropriate to single out or discount any of (these) matters…each has had a significant impact,” the auditors said.
The report, due to be discussed at the council’s Audit Committee today, Wednesday January 29, makes bleak
reading but confirms multiple previous findings about the backdrop to the council’s de facto bankruptcy, with
severe ramifications since for residents and staff. The council revealed it could not balance its books in 2023 and is
now under the control of government-appointed commissioners, has had to plan in more than £300m of cuts to
services, is selling off assets worth up to a billion pounds and has made more than 600 redundancies.
The report looks back to the council’s finances for the periods 2021-22, 2022-23 and 2023-24. The auditors
describe it as a ‘highly challenging’ period with multiple issues combining to ‘destabilise the council’s finances’.
The council has still not issued its finalised annual accounts for those years.
The failed implementation of the Oracle system runs through the report as a major problem. It ‘crippled the
council’s ability to manage and report on finances effectively,’ found the auditors. The costs of the scheme have
rocketed from around £20m to more than £130m but the impact runs far deeper, they found. It ‘crippled the
council’s ability to manage and report on finances effectively,’ and will not be fully functioning until at least 2026.
They found ‘serious mismanagement in the waste and street scene services led to inappropriate practices and
alleged non-compliance by workers with their terms and conditions – resulting in significant equal pay claims from
trade unions and commercial lawyers.’ Though their findings on equal pay are largely redacted in the report due to
ongoing legal issues, the auditors add: “The council has had a difficult history with matters relating to Equal
Pay…it has not yet resolved these matters sufficiently to end its on-going liability and continued action is needed.”
The likely settlement bill is expected to run to at least £300m.
But the auditors also made a point of highlighting their investigations showed the cuts to services now under way
were not as a result of the equal pay liability, which was originally forecast to run to as much as £815m. “The
service cuts are not as a result of the potential equal pay liability but reflect the underlying savings needed to
balance the budget,” they said.
The council also failed to deliver adequate levels of service in housing for several years, culminating in adverse
findings from the Housing Ombudsman and Housing Regulator around safety checks, with at least a third of
council homes failing to meet Decent Homes Standards. “The council has also failed to effectively handle
complaints and treat tenants with fairness and respect.”
The council failed children and families with special educational needs and disabilities on several fronts, triggering
intervention, while an independent inquiry into its ‘home to school’ transport scheme found ‘multiple failings’.
And the Perry Barr housing scheme cost £523.3 million to deliver – but a failure to manage risks and the changing
market meant the council was now facing a significant deficit that amounts to a loss to the public purse of ‘around
£300m’. On top of that, the council is also locked in dispute over the future funding of its highways contract.
The list of other issues that auditors say also contributed include:
- Inadequate budget setting, assumptions and delivery. The council ‘failed to set an appropriate budget in
- 2022-23 and failed to deliver savings in 2022-23, 2023-24…that led to substantial underspending in both
- years, and considerable use of reserves.’
- Raiding of reserves – the amount in the council’s reserves fell by £400m, from £1 billion in March 2022 to
- just £674m in March 2024.
- Severe pressures from Covid 19 and the preparations for the Birmingham 2022 Commonwealth Games
- Demand-led pressures for adult and children’s social care and temporary accommodation
- Poor contract, procurement and programme management of major schemes, especially over the Perry Barr
- homes scheme and the Acivico service contract.
On a positive note, the auditors said they were “satisfied appropriate steps are being taken to address the severe
financial position of the council.” But they say the council remains in a position of weakness, but not so much as to
warrant further intervention or action.
They also found a lack of timely information on the severity and implications of the emerging issues ‘hampered the
ability of senior managers and members to intervene effectively….made worse by a culture in the organisation of
not reporting or being receptive to bad news, an overemphasis on protecting personal reputations and a lack of
challenge and rigour in governance’.
“Many of the key pillars of good governance (broke) down, and (there were) pervasive weakness in the way the
council was run from 2021-2024,” they concluded.
Read more news:https://sportupdates.co.uk/
Leave a Reply