Bankruptcy in Birmingham: Why we still can’t trust Labour with money.

The Labour Party has been running a national campaign claiming to be the new party of “Sound Money”, but recent events in Labour-run Birmingham show that Labour might in fact be quite the opposite.

Birmingham is Europe’s largest local authority, a bustling and diverse centre of economic activity at the very heart of Britain, Naturally, the city has everything it needs for success: a young and ambitious population, excellent transport links to the rest of the country and a vibrant economy, so why is it that Birmingham City Council has issued a Section 114 notice, essentially meaning that the city could no longer balance its books?

Birmingham City Council has effectively blamed £760m worth of equal pay claims and expensive new IT systems, and to nobody’s surprise has attempted to shift the blame onto a conservative national government for supposedly leaving Birmingham underfunded. 

Rishi Sunak however has rebutted by claiming that it’s “not the government’s job to bail out the council for its financial mismanagement”. Statements such as these show that perhaps the conservative party sees this as an opportunity to attack labour on their campaign of attempting to be the party of “sound money” and rightly so, local labour councils have a long history of mismanagement, especially in Birmingham.

Labour incompetence in its local governance in Birmingham is a microcosm of its wider fiscal ineptitude. In 2019, locals accused the Birmingham City Council of wasting £10m on a cycle lane that locals claim is barely used, which includes a 2.5 mile bicycle highway along the A45, one of the most congested commuter roads in the city. In 2021 Conservative MP Gary Sambrook made a statement in the House of Commons regarding further monetary mismanagement by Birmingham Labour-run City Council, he stated that “the city council originally budgeted £2 million to move a bus depot. That escalated to £16 million, which local people are going to have to pay, all to achieve a move down the road of only 300 metres”.

The economic mismanagement under a Labour local council is epitomised by the experience of  local residents in Birmingham, who have faced increasing council taxes. The council’s claim that their economic trouble has stemmed from an equal pay bill is unequivocally false. 

The local council applied the maximum increase in council tax of 5% for properties worth between  £68,000 and up to £88,000, which is quickly becoming unaffordable for residents. And alongside this increase in council taxes, residents face a further reduction in their living standards with prospects of the withdrawal of services not provided by the state. Labour has given residents less value for their hard-earned money. 

If the Labour-run city council were fiscally responsible from the start, then they would have been able to avert the crisis. Labour has had effectively its entire tenure to deal with the scapegoat of unequal pay– the first payout was issued in 2012. Several large-scale projects, such as sporting events and costly bicycle events, are the root cause of the situation. 

The leader of the Birmingham City Council, John Cotton, was handpicked by Keir Starmer himself. However, Cotton was reported to be absent from the city just as the council’s bankruptcy announcement hit the airwaves. Visible leadership is critical in any crisis, but the absence of a Labour response in Birmingham does not bode well for a party that needs to establish that they can handle a serious crisis. 

The raging bull in the opening ceremony of the Commonwealth Games in 2022 was hoped to spark a “golden decade”, however The Times has recently revealed that the Labour-run local authority did not have the capacity to resolve its financial woes with hosting the games. A former non-executive director of the council, Max Caller, was appointed to deal with the council’s historic financial problems in 2019. He has since admitted that the games were a “challenge too far”. 

The largest local authority in Europe has, under Labour, suffered economic mismanagement– it should be a catalyst for many voters to reconsider whether the party deserves their anti-Tory vote. The events in Birmingham are a dark foreshadowing for future national Labour governments.

Image from Flickr