A 'civil war' has erupted inside Labour-led Birmingham City Council as councillors and union officials demand senior officers take the fall for the financial and equal pay crisis engulfing the city. Some Labour backbenchers are demanding urgent action including a clear out of senior staff.
They don't want to wait for the findings of an ongoing independent governance review or inquiry into the affair, saying a 'clean broom' is needed. We can reveal leader Cllr John Cotton had already been coming under pressure to oust senior officials over multiple operational failings BEFORE the council's finance chief declared Birmingham's virtual 'bankruptcy' this week.
The calls for decisive action have now reached a crescendo. Several backbenchers told the private gathering of most of Labour's 65 councillors on Friday evening that officers had to go now. One criticised officers for "not accepting culpability" for their parts in the dire state of affairs.
READ MORE: How Bull-ish promises masked financial reality of broke Birmingham
Days later the city's finance chief Fiona Greenway announced she was issuing a Section 114 Notice, admitting the council could not meet its financial obligations. It's a legal step that effectively signals 'bankruptcy' and means all non essential spending ends.
A senior union official has also joined the clamour for urgent action, while a local government expert with inside knowledge about Birmingham says it is 'untenable' for the current leadership team to remain in place - while also expressing sympathy that they have walked into a council 'that is rotten'.
READ MORE: 'Broke' Birmingham City Council faces takeover threat as equal pay crisis triggers 'bankruptcy'
Asked about the situation today, September 7, Birmingham Edgbaston MP Preet Gill said she does not believe now is the time to further destabilise the council. "It is absolutely right that there is accountability and people need to be held to task for failure but a process is in place to investigate and learn lessons and that's what we need to do rather than be reactive and cause further instability. We cannot ever be in this place again."
The calls for action come as the Labour administration comes under huge scrutiny to answer how the financial crisis, especially over equal pay liability, has spiralled out of control.
PM Rishi Sunak condemned Labour for 'bankrupting Birmingham' at yesterday's Prime Minister's Questions while local opposition councillors have said it is the Labour leadership that is wholly to blame for the crisis.
A massive equal pay liability - thought to now top £1 billion - along with the costs of putting right a disastrous IT implementation programme, and the rising costs of meeting demand for adult social care, the housing crisis and children's services, have all taken their toll. The Department of Levelling Up, Housing and Communities, led by Michael Gove, is now keenly watching affairs and deciding whether to officially intervene.
The case for action
Multiple Labour sources say most of the high cost issues that have brought Birmingham to its knees - especially around equal pay and the £100m bill to put right a poorly implemented IT system - are operational. They also claim councillors have not been given the full picture about the extent of problems because officers have been keen to mask failures.
They say this includes not giving answers to questions about the continued use of 'task and finish' by waste and parks services - a working practice known to trigger equal pay claims; and not divulging the true extent of the problems around the installation of the Oracle system for months.
They further claim recent council accounts have dramatically underplayed the risk of equal pay claims - and say that is down to council officers. Ravi Subramanian, UNISON West Midlands Regional Secretary, said it was officers, not councillors, who deemed this year's equal pay liability was 'zero' in the risk register to the annual accounts, despite knowing of multiple ongoing claims. "They massively under-estimated the magnitude of the equal pay claims, but also assessed the chance of any claims being paid out as zero. We now know this was a catastrophic failure of judgment.
"Some of the executive managers who had responsibility for assessing this risk still work for the council. It beggars belief that these same executive managers who made this catastrophic mistake are continuing to give advice on the best way forward on job evaluation and equal pay."
His union, the biggest in the council, has called for an urgent review of the actions of specific senior managers. "The council workforce and the people of Birmingham cannot afford for these executive managers to make more catastrophic errors.”
In an interview with BirminghamLive on Tuesday, Cllr Cotton, asked if he had 'confidence' in the executive team to deliver the recovery, refused to be drawn. He spoke instead of the collaborative effort that was being made to meet the challenges. He confirmed he has asked the Local Government Association to provide officer support and was looking to set up an external 'improvement board'.
"My priority is to focus on delivering that financial recovery plan. That absolutely has to be a collaborative effort between the elected members, the Cabinet and the officers. We have been given a very serious message...our focus has to be to ensure we need to meet with the demands laid down," he said.
He refused to 'score' the current leadership team but insisted work was being done collaboratively. "We also need to clearly take the governance review seriously and reflect upon its recommendations that they may make."
Specifically asked if he had confidence in the council's chief executive Deborah Cadman and her leadership of the staff he said: "I have made my expectations of the senior leadership team clear. We have to address the big structural challenges. It is helpful to have some additional support from the Local Government Association and the independent oversight about where things have gone wrong. We now need a remorseless focus on what we need to do."
Cadman - at the helm for just over two years - is among the targets. She has not spoken publicly about the unfolding crisis, but has made clear she intends to stay and continue to put right what are seen as 'long standing' issues that she has vowed to root out and expose.
She took over in 2021, after a period of tumult and during the Covid pandemic, and was hailed as a homegrown local government star. She appointed the council's previous finance director Rebecca Hellard, who has recently left the council. In an interview in June, Cllr Cotton, then recently installed as leader, confirmed Hellard had resigned. Her departure was linked to the issues around Oracle and budgetary issues.
Other senior finance staff are also understood to have left recently. The council has refused to discuss the current status of individual staff.
Local government expert Donna Hall was one of a team of external advisors brought in five years ago to help Birmingham when it last faced dire warnings about its future. Charged with looking at its culture and governance, her findings were gloomy but set out a path for recovery.
But on the back of the news of the current financial woes, she is pessimistic. "I am afraid to say that there seems to be something culturally wrong within the city council, that outside input has been unable to help shift. The saying 'There's something rotten in the state of Denmark' could be applied here."
"I have had confidence in the current and previous chief executives - Chris Naylor (interim chief executive in 2020 who quit early after failing to secure the backing of then Labour leader Ian Ward) and Deborah Cadman are stars of local government, they are two of the best, so if they can't do this job, then who can?
"People working in Birmingham have to be comfortable in telling the truth - but when you have a lack of honesty and people scared to speak up that is a deeply worrying cultural issue.
"A takeover now is inevitable in my opinion and that means a zero based budget will follow."
We have reached out to Birmingham City Council and Deborah Cadman to discuss the issues raised and the call for sackings. They both declined to comment.
Email jane.haynes@reachplc.com if you work for the city council and wish to discuss this story, in confidence.
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