Birmingham City Council given spending freeze as judge set to scrutinise its financial failures

The black hole in the council's budget is estimated to be between £650m to £760m Credit: PA

An immediate spending freeze has been put in place for Birmingham City Council over its financial failures - with a government review and a judge-led inquiry to take place.

An action plan has been announced to investigate the council over its financial failures in what councillors have branded as "the biggest challenge the council has ever faced".

Meanwhile Birmingham Local Conservatives have criticised the Labour Cabinet for "failing to do their jobs properly."

The black hole in the council's budget is estimated to be between £650m to £760m.

The council had already paid out a billion pounds to settle equal pay claims, but last week said Oracle, a new computer system its using to handle its finances, revealed that significant additional Equal Pay costs will need to be provided.

Now the council says it will formally commission an independent Governance Review (in collaboration with the Department for Levelling-Up, Housing and Communities, to focus on issues such as Equal Pay.

Given the scale of the sums, a judge-led inquiry will be commissioned to see who is accountable for the issue of equal pay that has accumulated since 2012.

This is expected to begin in the Spring of 2024.

Birmingham City Council leader Cllr John Cotton said: "I've been clear from day one that I will take whatever action is needed to address the substantial challenges facing the council and these measures are essential to grip the situation - particularly in terms of financial controls, organisational capacity and improved governance.

"We will be open and transparent throughout this process and the independent reviews and judge-led inquiry will ensure that there is proper accountability for these failings."

Birmingham City Council deputy leader Cllr Sharon Thompson added: "This is one of the biggest challenges this council has ever faced, and we must understand how the issues have arisen to prevent a repeat in the future.

"Given the scale of this challenge, we must impose mandatory spending restrictions. But as we have done throughout the cost-of-living crisis, we will continue to focus on tackling social injustice and inequality across our city.

"We will do everything we can to protect the services our residents rely on."

Cllr Robert Alden, Leader of the Opposition and Birmingham Local Conservatives, said: “News that even more external support is needed, after a decade of help propping up this failing Labour administration, shows just how incapable the Labour Administration are now seen as across the country.

"It is clear that these Labour cuts are just the start and thanks to the Labour Cabinet failing to do their jobs properly, residents are in for years of suffering as Labour slash vital services to pay their debt."