Experts Call for Public Inquiry into Birmingham City Council Bankruptcy
A group of accounting, finance, and local government experts have come together to urge local government minister Steve Reed to launch a public inquiry into the bankruptcy of Birmingham City Council. The open letter signed by thirty-five experts highlights discrepancies in the council’s financial statements and questions the accuracy of the figures that led to the council’s bankruptcy.
The letter points out that certain key figures, such as forecasted reserves and equal pay liabilities, appear to have been misstated, contributing to the council’s financial woes. The bankruptcy was exacerbated by the failed implementation of an Oracle ERP system in April 2022, which caused significant disruptions to the council’s financial processes and reporting capabilities.
Following the disastrous ERP implementation, council leader John Cotton publicly acknowledged the challenges faced by the council. In September 2023, the council was forced to issue a Section 114 bankruptcy notice, leading to a series of austerity measures including budget cuts, asset sales, and increased borrowing costs.
According to James Brackley, an accounting lecturer at the University of Glasgow, the council’s financial woes were based on flawed data and exaggerated deficits. He notes that subsequent asset sales in 2024/25 actually resulted in significant surpluses across all core reserves, contradicting the narrative of bankruptcy.
Sharon Graham, general secretary of Unite, criticized the appointment of government commissioners who were paid exorbitant fees without providing value. She emphasized that council workers and residents are bearing the brunt of the crisis caused by financial mismanagement.
In light of a report by Grant Thornton on the Oracle system implementation, the council has revised the timeline for the system to be fully operational by April 2026. However, concerns remain about the functionality of the income management system (IMS) that is crucial for financial reporting.
