Birmingham Council Moves Forward with Proposed Council Tax Increase
Birmingham City Council has taken a significant step toward implementing a council tax rise of approximately 5 percent for the upcoming financial year. The Labour-led authority recently unveiled its draft budget proposals for 2026/27, marking a pivotal moment as the council declares it is no longer in a state of effective bankruptcy.
Financial Recovery and Proposed Tax Hike
Following its declaration of effective bankruptcy in 2023, the council implemented severe cuts to local services and approved substantial council tax increases—around 10 percent initially, followed by approximately 7.5 percent the subsequent year. Despite closing an enormous £300 million budget gap and contending with ongoing disruption from the bins strike, the council is now proposing a 4.99 percent council tax increase for Birmingham residents in 2026/27.
The government imposes a cap on council tax increases, limiting most authorities to a maximum rise of 5 percent, which applies to Birmingham. If the full council approves this proposed increase, council tax for a Band D property would rise from £2,237 to £2,353.17 starting this April—an increase of just over £116 annually. This figure includes precepts for the Fire and Rescue Authority and the Police and Crime Commissioner, both subject to formal approval.
Council Leadership and Opposition Responses
Council leader John Cotton addressed the proposed increase, stating: “Obviously I regret the fact that we found ourselves in the position where we had to take the increases that we did in the two previous budgets. We’re now back in the mainstream of local government following practice when it comes to council tax across the country.” He emphasised that Birmingham maintains a generous council tax support scheme and noted that average council tax per household remains at the lower end compared to other core cities.
However, opposition councillors have expressed strong criticism. Liberal Democrat group leader Coun Roger Harmer argued the council remains far from recovery, citing ongoing challenges like the bins strike and persistent issues with fly-tipping and road conditions. “Our streets are covered in fly-tipping, our roads are crumbling, and our council tax has soared year on year,” he stated. Conservative leader Robert Alden echoed these concerns, asserting that “council tax has rocketed while services have been slashed.”
Budget Plans and Future Investments
Cabinet members approved the budget plans at a meeting on February 10, where the proposed council tax rise faced scrutiny. Coun Cotton described this as a significant moment in the council’s recovery, attributing progress to decisive action and hard work by council members and officers, supported by government-appointed commissioners. “Thanks to the decisive, tough action we took to get the council back on track, the ‘bankrupt Birmingham’ tag is now a thing of the past,” he declared.
The council’s budget for 2026/27 includes an additional £130 million investment in council services, focusing on:
- Cleaner and safer streets
- Enhanced local services
- Community investment in homes and jobs
Cotton expressed ambition for Birmingham’s future, highlighting plans to collaborate with West Midlands Mayor Richard Parker and the government to deliver essential services and infrastructure.
Context and Ongoing Challenges
Birmingham’s financial crisis has been exacerbated by specific local issues, including equal pay liabilities and problems with the Oracle IT system. Labour councillors have also pointed to funding cuts during the previous Conservative government as a contributing factor.
The ongoing bins strike, triggered by disputes over the Waste Recycling and Collection Officer role, has further strained relations. Striking workers claim they face pay cuts of up to £8,000—a figure contested by the council, which insists a fair offer was made before negotiations ended last summer.
Despite these challenges, the council maintains that the proposed council tax increase is necessary to sustain and improve local services, emphasising that council tax funds a wide range of community provisions beyond waste collection.
