Doubts over Birmingham leisure provision after bankruptcy notice

Birmingham City Council’s declaration that it was bankrupt will inevitably have a devastating impact on spending, including on leisure activities.

According to a BCC statement, aside from protecting the vulnerable and statutory services, the council will tighten the spending already in place – and that means all new spending, including leisure services, must stop immediately.

In line with a number of other UK councils, BCC is facing equal pay compensation claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month.

The council said it must fund the equal pay liability, yet it doesn’t have the resources to do so. The interim director of finance issued a report under section 114(3) of the Local Government Act, confirming it has insufficient resources to meet the expenditure.

Leisure services and events management “would be most prone to being cut back”, according to Dr Steven McCabe, a political economist at Birmingham City University, as quoted in the Mirror Online. He added that last year’s Commonwealth Games in the city would have been the sort of thing to go first.

BCC spent £184m on its bid to stage the Commonwealth Games, as well as investing £13m in the 2026 European Athletics Championship.

Local Government Association estimates English councils face a funding gap of almost £3bn over the next two years just to keep services standing still and is calling for a “long-term plan to sufficiently fund local services”.

Speaking to the press, Shaun Davies, LGA chairman, said: “Councils in England face a funding gap of almost £3bn over the next two years just to keep services standing still.

“Councils’ ability to mitigate these stark pressures are being continuously hampered by one-year funding settlements, one-off funding pots and uncertainty due to repeated delays to funding reforms.

“The Government needs to come up with a long-term plan to sufficiently fund local services. This must include greater funding certainty for councils through multi-year settlements and more clarity on financial reform so they can plan effectively.”

BCC says its officers and members are “committed to dealing with the situation” and that when more information is available it will be shared in due course.

“At this stage we don’t have anything further to add to our statement,” said BCC’s press office.

The news means the council has to stop spending as it cannot enter into new agreements which will incur a cost.

The council can still spend money on:

• existing staff and payroll costs
• expenditure on goods and services which have already been received
• expenditure required to deliver the council’s statutory services at a minimum possible level#
• urgent expenditure to safeguard vulnerable residents and contractually committed expenditure
• expenditure through ring-fenced grants
• expenditure that will improve the council’s financial situation, that is necessary to reduce overall costs.

According to reports in the media, as well as with BCC, the GMB union also has equal pay disputes against councils in Coventry, Westmorland, Cumberland, Glasgow, Dundee and Fife, so it may not be the last time that councils will have to decide on which services will potentially have the plug pulled on further funding.