A dramatic public confrontation has cast fresh doubt on the events that led to the financial collapse of Britain's largest local authority. Birmingham City Council's finance director and a prominent academic critic went head-to-head in a special meeting, debating whether the council truly needed to declare itself effectively bankrupt in 2023.
The Council's Defence: A 'Nuclear Option' Forced by Crisis
Carol Culley, the council's Executive Director of Finance, defended the decision to issue a Section 114 notice in September 2023. She argued the council faced an impossible financial position, primarily due to a massive and unresolved equal pay liability estimated at up to £760 million.
Ms Culley told the council's audit committee there was no viable plan to settle the claims at the time, and the liability was accruing daily. The council was also projecting an £87 million budget gap and was hampered by a failed Oracle IT system providing unreliable data. With insufficient uncommitted reserves to plug the holes, she stated the legal notice – often described as a council's 'bankruptcy notice' – was the only responsible course of action.
"It is easy to judge with the benefit of hindsight," she said, "but at the time there was no job evaluation scheme, nor a route to reaching a settlement, so we had to account for that full liability."
The Critic's Case: 'Figures Were Completely Wrong'
Her arguments were directly challenged by Dr James Brackley, an academic whose research has scrutinised the council's financial claims. He asserted the council had overstated the crisis, relying on inaccurate figures and unreliable predictions.
Dr Brackley claimed his investigations revealed the council was in a much healthier position than declared, with tens of millions more in usable reserves. He pointed to an apparent 'accounting error' of £185 million and argued the delayed publication of the council's accounts for that period proved the bankruptcy declaration was premature.
"Having spent two years justifying bankruptcy on the basis of numbers that it now turns out were completely wrong," Dr Brackley said after the meeting, "officers are now asking us to believe that the errors were not 'material'." He suggested the subsequent harsh cuts and asset sales may have been unnecessary.
Lasting Consequences and Unanswered Questions
The Section 114 notices triggered severe consequences: a government takeover by commissioners, a spending freeze, deep service cuts, hundreds of job losses, and a £300 million fire sale of land and assets. Councillor Lee Marsham highlighted the sale of the former Wheels site to Birmingham City FC's owners for £50 million, far less than an agreed price two years prior, as an example of the fallout.
In response to the criticism, Ms Culley conceded the figures were not 'spot on' but were 'materially accurate'. She revealed the now-published equal pay settlement figure of £250 million with GMB and Unison unions was 'a wee bit underestimated', and the final total bill could yet approach the original higher estimates. She maintained that borrowing to pay the bill later would have been more costly.
External auditor Mark Stocks of Grant Thornton, who was in post in 2023, supported the council officers' view, stating the authority was 'definitely in crisis' at the time, with unions refusing proposed solutions to the pay dispute.
Despite the council now being 'close to moving out of the period of severe financial distress', the painful programme of cuts continues, and the debate over the necessity of the entire bankruptcy process remains fiercely unresolved.
