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Birmingham City Council
Section 114 notice issued 5 September 2023
Summary
Europe's largest local authority declared itself unable to balance its budget after years of accumulating equal-pay liabilities collided with a troubled new IT system that made it hard for the council to even see its own finances clearly. The notice cited an £87m in-year overspend and a projected £760m equal-pay liability — with a further £375m gap for the following year and no plan yet to close it.
The numbers
£87m
2023/24 in-year overspend
£760m
Projected equal-pay liability
£375m
2024/25 budget gap at time of notice
£750m
Target asset sales to cover liabilities
21%
Council tax rise over two years
2026/27
First targeted balanced budget
Timeline
Years prior
Birmingham accumulates a growing equal-pay liability, stemming from historic under-payment of staff in roles predominantly held by women (such as care and cleaning staff) relative to male-dominated roles — a problem that had already cost the council heavily once before, in a previous settlement in the 2010s.
Ongoing
The council rolls out a new Oracle IT system intended to modernise its financial systems; the rollout runs into serious problems, undermining the council’s ability to accurately track its own spending and income.
5 September 2023
Birmingham issues a Section 114 notice. It reports an £87m overspend for 2023/24 and a projected equal-pay liability of £760m.
Late 2023
Government-appointed commissioners arrive and find a further £375m budget gap for 2024/25, with no savings plan in place to address it. Most of the council's reserves turn out to be restricted to specific purposes (such as education spending), leaving little genuinely available.
2024
The council proposes and receives approval for a steep council tax rise — 10% in the first year, with a further 10% the following year, well above the standard cap.
2024–2025
Birmingham pursues asset sales targeting around £750m to help meet its equal-pay and budget liabilities.
February 2024
The council publishes its 2024/25 budget; government commissioners describe it as “deliverable” but stress that “the real work of delivery needs to take place with discipline and pace.”
Where things stand
As of the commissioners' most recent statement, Birmingham is targeting its first fully balanced budget since the crisis began for 2026/27, contingent on completing the planned £750m in asset sales. The commissioners describe earlier claims that the council was in reasonable financial health as 'entirely incorrect', and say the council remains focused on stabilising its books while continuing to deliver services to residents.
Sourced from council and government reports, the Institute for Government, CIPFA, Local Government Chronicle, Room151, and contemporary news coverage. Some figures vary slightly between sources depending on scope and date — where that happens, we've noted the range rather than picking one number.