Commissioners to take over Birmingham City Council and local inquiry launched, Government confirms

Commissioners will be appointed to take over Birmingham City Council after the authority declared itself effectively bankrupt, the Government has confirmed.

Michael Gove has announced he will also launch a local inquiry into the authority.

The Communities Secretary said he was "satisfied that Birmingham City Council is failing to comply with its best value duty" after it issued a Section 114 notice on Tuesday 5 September.

As part of this notice, the council halted non-essential spending.

It came as the council struggles to pay an equal pay settlement worth £760m.

He added: "In line with the Local Government Act 1999 therefore, I can announce that I am today writing to the council to set out my proposal to intervene and to appoint commissioners and that I intend to launch a local inquiry in due course.

"I do not take these decisions lightly, but it is imperative in order to protect the interests of the residents and taxpayers of Birmingham, and to provide ongoing assurance to the whole local government sector."

Michael Gove told MPs: "The residents and businesses in Birmingham deserve better and the intervention package I'm proposing today is formed of two complementary parts.

"First, I propose to issue statutory directions to the council and to appoint commissioners to exercise certain functions of the council as required.

"And second, I intend to launch a local inquiry to consider the more fundamental questions around how Birmingham got to this position and options for how it can become a sustainable council moving forward that secures best value for its residents.

"I'm proposing a transfer to the commissioners of the exercise of all functions associated with the council's governance and scrutiny of strategic decision making, all functions associated with its financial governance and the scrutiny of its strategic financial decision making, and all functions relating to senior appointments.

"And, as part of the proposed direction, the council would, under the oversight of the commissioners, prepare and agree an improvement plan within six months, which would set out the council's own plans to make the necessary improvements to the whole council to return it to a sustainable financial footing."

Mr Gove said the commissioners will have the power to make decisions directly if needed, adding he is "minded" to implement the package he has set out and the city council has five working days to make representations.

In response to Secretary of State Michael Gove’s announcement, Birmingham City Council leader Cllr John Cotton said:

“We welcome today's announcement and will now work with DLUHC and the commissioners to get the council back on a sound financial footing.

“On becoming Leader, I was concerned that there was a lack of senior capacity at the council to deal with the issues that we face, which is why we asked Secretary of State Michael Gove and the Local Government Association to help us rebuild that capacity and support us to get the budget on track. Today's announcement is an important step in that direction.

“Although this is a challenging time, and comes after a decade of cuts totalling £1 billion, we will make the tough decisions needed to transform the council, restore financial sustainability, and deliver the services that the people of Birmingham deserve.

“A report outlining elements of our initial response will be considered and discussed by full council on Monday 25 September and we will continue to be on the side of our residents as we build a better Birmingham.”