Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.
It was billed by Labour as the start of a ‘Golden decade’. Just two years ago, as Birmingham prepared to welcome the Commonwealth Games and local elections loomed, the city’s Council House provided the backdrop for the launch of Labour’s plans for the city.
That summer’s Games, of course, were a triumph – smashing the stereotypes that had shackled the city for generations. They showcased an innovative and diverse city that had the confidence to grasp opportunity and deliver. It was clear that Birmingham had turned a corner, with record visitor numbers driving record investment. A proud new vision of the city had been broadcast to the world.
However, unknown to jubilant Brummies, a crisis was gestating in the council’s finances. A little over a year later, the same Labour-run council had filed two section 114 notices, effectively declaring that Europe’s largest local authority was bust – brought to its knees by a £760m equal pay liability and an IT system fiasco. ‘Bankrupt Birmingham’ beamed around the globe.
Today, with Birmingham Council House under the control of a team of Government commissioners, the results of this effective bankruptcy have been laid bare.
It is difficult to find the words to describe the shocking impact residents face: a 21 per cent increase in council tax, 100 per cent cut to the city’s cultural organisations, streetlights dimmed, youth services cut, adult social care cut, libraries to close, burial costs going up… The list is agonisingly long.
I want to use this column to explain how this terrible crisis came about, what it will mean to local people, what I as Mayor am doing to mitigate its impact, and finally how an indefatigable Birmingham continues to attract investment and refuses to be defined by Labour’s financial meltdown.
First, I think it’s important to stress that this is a problem of the council’s own making. Yes, it’s true that local authorities everywhere face financial challenges and, while there has been a recent uplift in funding under this Government, the hangover from the austerity years lingers on.
Lack of central funding, however, is not the reason Birmingham City Council have gone bust – nor is it the reason Croydon, Nottingham, or Thurrock have gone down the same route. Poor decision-making at local authority level can have dire consequences, and the situation in Birmingham was made in the city council.
Indeed, a recent report laid bare how the culture within the organisation failed. It identified an optimism bias, a deep-seated blame game, and a breakdown of trust between elected officials and officers. Quite simply, the council stuck its head in the sand and pretended everything was fine when it wasn’t. Tough decisions were not taken.
The result? A £19m IT system now set to cost more than £100m after a botched installation, and a £760m equal pay claim.
The frankly scandalous thing about what has happened in Birmingham is that there was another equal pay claim before, in 2014; it too was settled at a cost of £760m. That the council failed to grasp the problem properly then, and repeated the error, underlines the scale of the failure of institutional culture and leadership.
It’s utterly depressing that the same thing has happened twice, and citizens in Birmingham are left paying for what the Labour-run council has done.
Naturally, Brummies are immensely angry that they are going to foot this bill. The usual self-deprecating wit has been replaced by outrage, with citizens facing the realisation that they will be paying a lot more for a lot less. And this is just the ones who can pay; what about some of the least fortunate in society, who are already teetering on the edge?
However the council is not the city. The great city of Birmingham is much more than the bankrupt administration that has dragged it into the headlines.
As the region’s Mayor, I am doing everything I can to help as we brace for the consequences of the council going bust. Public bodies, including the West Midlands Combined Authority (WMCA) which I lead, are looking at how we can offer support and in some areas step in.
Under my leadership, the WMCA is continuing to make the investments needed to keep Birmingham, and the wider West Midlands, moving forward.
I’ve ensured we have protected our public transport network with fares kept low; invested hundreds of millions to open new dedicated bus lanes, rail stations, metro routes, and cycleways; bucked the national trend on housebuilding, meeting our annual building aims and smashing our affordability target; and overseen a rapid increase in the skills of our workforce – a key driver of our phenomenal inward investment numbers.
In some cases, the WMCA has stepped in directly on projects: funding an expansion of the Hippodrome theatre after the city council pulled out, and saving the European Athletics Championships, which are due to be held in Brum in 2026.
Perhaps most pertinently of all, the WMCA has set a balanced budget for 2024/25, the eighth year in a row. Likewise, for the eighth year in a row I have also refused to introduce a mayoral tax. Coventry, Dudley, Sandwell, Solihull, Walsall, and Wolverhampton councils (the six other LAs that make up the WMCA) are all set to have balanced budgets for another financial year too, and the Government will be reviewing what role it can play to support our city.
It is also frustrating that the dire situation at the council flies in the face of a city that is making great strides. Since I became mayor, the West Midlands has seen remarkable levels of investment, with a tangible sense of renewal. The dreadful financial mismanagement of the Labour administration in Birmingham must not be allowed to undermine the tremendous progress we have made.
“Birmingham council goes bust while the city around it booms” was how the Financial Times reported the crisis last year, as an inward investment surge lead to more projects coming to the West Midlands than Scotland and Wales combined.
Now the private sector, who have so often put their money on Brum’s future, are betting on the city again. Huge investment in all kinds of sectors, from life sciences to media, continues to pour into Birmingham, attracted by the innovations coming from our universities, our central location, comparatively low cost bases, and increasingly skilled workforce. At grassroots level, the city remains a hot bed of start-ups. Business is backing Birmingham.
Meanwhile, the general public is also mobilising against council cuts. Backed by the city’s Conservative councillors, they are getting ready to fight their corner.
I have said before that the people here are different, offering quiet confidence and self-effacing humour in place of the swagger and bluster you find in other places. Make no mistake, they are also determined and resilient. In the West Midlands, we do not give up. The message is clear: this city will not be defined by what has happened at the council.