Birmingham City Council will be taken over by Michael Gove-appointed commissioners – and an investigation will be launched after declaring itself effectively bankrupt

Michael Gove has announced he will appoint commissioners to take over Birmingham City Council and launch a local inquiry into the authority after it was declared effectively bankrupt.

The communities secretary said he was “satisfied that Birmingham City Council is failing in its duty to deliver maximum value” after issuing a section 114 notice.

He added: “In accordance with the Local Government Act 1999, I can therefore announce that I am writing to the council today to set out my proposal for intervention and the appointment of commissioners and that I intend to hold a local inquiry in due course to initiate.”

“I do not make these decisions lightly, but they are essential to protecting the interests of Birmingham residents and taxpayers and providing ongoing certainty for the entire local government sector.”

The new commissioners will look after the council’s financial affairs and are expected to sell assets to balance Birmingham’s books. Possible sales include the Birmingham library and the council’s 18.7 per cent stake in Birmingham Airport.

Michael Gove (pictured) has announced he will appoint commissioners to take over Birmingham City Council

The Alexander Stadium, which hosted the 2022 Commonwealth Games, could also be sold to raise funds.

The city’s heritage-listed Birmingham Museum and Art Gallery, which houses the world’s largest collection of Pre-Raphaelite paintings, and the 50-year-old Sarehole Water Mill, which is close to where Lord of the Rings author JRR Tolkien grew up sale

The decision to appoint commissioners has left Birmingham City Council the latest local authority to be taken over by central government, after Thurrock and Woking councils were effectively declared bankrupt this year.

Gove’s announcement came after Birmingham City Council effectively declared bankruptcy on September 5 due to insufficient funds to pay a £760 million equality claim.

The £760 million bill, currently at rates of between £5 million and £14 million a month, came after the council was ordered to pay staff compensation after allegations it paid female workers less than paid to male employees.

Costly efforts to install Oracle ERP financial reporting software on Birmingham City Council’s IT systems have also been blamed for the local authority’s financial situation.

As a result of the failed bid, Birmingham City Council was forced to spend £46.53 million on fixing “urgent” issues with its IT systems in June 2023, as it estimated the total cost of overhauling the system at around £100 million.

Councilors blamed the situation on “long-standing problems”, including “a huge increase in demand for adult social care, dramatic cuts in business rates, rampant inflation” and central government cuts.

Birmingham City Council has been forced to cut costs by £1 billion since 2010 as UK central government funding has been cut.

The local authority in turn announced that all new spending would stop immediately, except for statutory services and those protecting vulnerable people.

More to come…