Revealed: How ‘bankrupt’ Birmingham council spent millions on botched IT system, ‘inclusive’ new street signs, and the Commonwealth Games – while also blowing £50m from the hated Clean Air Zone on hydrogen buses… as rubbish piles up and violence soars

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Revealed: How 'bankrupt' Birmingham council spent millions on botched IT system, 'inclusive' new street signs, and the Commonwealth Games - while also blowing £50m from the hated Clean Air Zone on hydrogen buses... as rubbish piles up and violence soars

Birmingham City Council made a series of costly expenditures before it was forced to declare itself ‘effectively bankrupt’, it has emerged. 

The council spent millions on a botched IT system and spent another £184 million on its costly bid to stage the Commonwealth Games.

It raked in close to £90 million from its controversial Clean Air Zone – only to pump more than £50 million back into hydrogen buses and cycle lanes. 

Other costs include a £13 million investment in the 2026 European Athletics Championship, as well as unrevealed outlays on a series of ‘inclusive’ street signs and an ambitious ‘Green roads’ plan.

The spending exacerbated financial issues at the council, with one former executive revealing today he had urged council bosses not to divert attention away from its money woes by bidding for the Commonwealth Games and other ambitious plans.

Speaking to MailOnline, locals slammed the council for its spending on ‘vanity projects’, as they hit out at spiralling violence in the city, as well as issues over services such as bin collecting. 

The debt-ridden council, the largest in Europe, now faces a huge shortfall of £87million after it saw costs of its troubled Oracle IT system balloon from £13million to up to £100million.

On Tuesday, chiefs were forced to declare the council effectively bankrupt after also being hit by a £760million bill over equal pay claims. 

Under-fire council boss John Cotton told the BBC 'tough decisions' would need to be made, as it emerged he was dealing with the crisis remotely while on holiday with his family

Under-fire council boss John Cotton told the BBC ‘tough decisions’ would need to be made, as it emerged he was dealing with the crisis remotely while on holiday with his family

Council boss John Cotton, who was handpicked for the role by Keir Starmer to run the authority, has been slammed for being on holiday in New York for his 50th birthday as his council goes bust.  

Now, it has emerged a top advisor warned civic chiefs hosting last summer’s  Commonwealth Games would divert vital attention and resources away from tackling long-standing money struggles – with Birmingham and its partners expected to raise £184.2m for games. 

Former advisor Max Caller said the event had been a ‘challenge too far’ for the problem-plagued authority and said councils in trouble needed to focus on getting the basics right instead of splashing out millions on huge events.

Mr Caller, who was appointed in 2019 to try and help Birmingham deal with a legacy of disastrous financial problems, said the move to run the Commonwealth Games had been a mistake. 

Speaking to the Today programme, he said: ‘The problem with councils that are in trouble is they just need to focus on getting better, rather than trying to do nice new things.

‘There is a limit to the amount of political and managerial capacity and if you’re spending time doing Commonwealth Games you cannot cope with the serious problems that you already face.

‘The advice that I gave, and that others gave, to officers and members at the time was that this was likely to be a challenge too far.’ 

He said while the games had been an ‘amazing event’, it had moved effort away from addressing ‘the underlying problems that had been around since before 2015’ and the authority’s focus should have been on ‘doing the basics’. He added: ‘You can’t do nice things if you haven’t done the boring really well.’

Labour-run Birmingham City Council was accused of 'virtue signalling' in December 2020 after it named six new roads in Perry Barr: Diversity Grove, Equality Road, Destiny Road, Inspire Avenue, Respect Way and Humanity Close

Birmingham City Council ran a competition for locals to name six streets on a 1,400-home development – but the winning choice has been criticised

Martin Allen, 69, lives Harborne and said his bins have been affected by the bankruptcy new.

Martin Allen, 69, lives Harborne and said his bins have been affected by the bankruptcy new.

How the city currently looks Pictured: Plans for how the city might look following the implementation of the green scheme

Pictured: Plans for how the city might look following the implementation of the green scheme, which 

Birmingham’s financial meltdown triggered outrage from locals, who feared vital services like rubbish collection would collapse, while the Tories blamed bureaucratic ‘incompetence’ by Labour for causing the bankruptcy debacle. 

The crisis has fuelled fresh speculation the city’s 1.1million residents will face a 10 per cent hike in council tax, as happened when other authorities ended up in a similar plight – with furious locals lashing out at council chiefs over the financial fiasco. 

And in 2020 Birmingham was accused of virtual signalling after it gave six new streets ‘woke’ names, like Diversity Grove, Equality Road, Destiny Road, Inspire Avenue, Respect Way and Humanity Close. 

Furious locals have today been expressing their anger at the financial crisis as they feared for the future of the city’s key services. 

Martin Allen, 69, lives Harborne and said his bins have been affected by the bankruptcy news.

Martin Allen, 69, lives Harborne and said his bins have been affected by the bankruptcy new.

Martin Allen, 69, lives Harborne and said his bins have been affected by the bankruptcy new.

Both residential and commercial rubbish combined with people leaving black bin bags open on their street is creating a serious rodent issue, according to local business owners

Both residential and commercial rubbish combined with people leaving black bin bags open on their street is creating a serious rodent issue, according to local business owners

Birmingham City Council said it 'simply isn't on when people dump waste in alleyways'

Birmingham City Council said it ‘simply isn’t on when people dump waste in alleyways’

The civil engineer said: ‘It’s been known about for three or four months now, it’s almost been public knowledge.

‘It’s a big disappointment I think. Nothing has happened about it and now here we are. They’ve put white flag up.

‘I had my first suspicions before it was announced when they stopped the bin men coming on the Monday. Now we’ve got to stockpile all of our waste in our gardens.

‘As of Monday they’ve been stopping our bin collections. The reason being they’ve been can’t afford the diesel for the trucks.

‘No doubt they’ll be a shortage of plastic bags now. We’re thinking we’re going to be overrun with rats’

Jean Jones lives on the outskirts of the city but says those in charge are to blame for the system collapse.

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The 69-year-old said: ‘The people coming here because it’s the city where supposedly everything is accessible will be affected.

‘Just think how big it is, the budget for this place must be astronomical really.

‘I did accounts and I and others kept a budget and we kept an eye on it.

‘They knew this was coming, but the sooner you can start to put money away in contingency plans the better.

‘When I saw that they went into bankruptcy online I thought we’ve all got no chance as if they can’t run this there’s no chance.

‘Where’s the accountability for it. They just pass the blame around. I blame whoever is looking after this.

‘They’ll blame the people before and I’m so angry about that. How did we allow this to go on.’

Doreen Cotton, 69, lives in Ladywood and says the council are selling up a lot of their buildings in the area. 

Gaynor Saiddmy, 49, and Doreen Cotton, 69 (right) fear for the future of the city amid the crisis

Gaynor Saiddmy, 49, and Doreen Cotton, 69 (right) fear for the future of the city amid the crisis 

She said : ‘I’m not surprised things are the way they are. Over the past 12 months my gardening facilities have been cut, you’re having to get in touch with them. The area has been run down.’

She added she was furious at the people in power for splashing money on costly events and changing street names. 

‘Why are they wasting money on changing street names, for what reason? It’s like when they changed the numbers on the bus routes. It’s just a load of rubbish,’ she said.

Birmingham said in June it faces an equal pay liability of between £650million and £760million, which is growing at between £5million and £14 million a month and which is now estimated to be more than £1 billion.

Listed: The English councils that have gone BANKRUPT since 2000 

Hackney (2000)- Labour

Northamptonshire (2018) – Conservative

Thurrock (2022) – Conservative

Croydon (2022) – Labour

Woking (2023) – Liberal Democrats

Birmingham (2023) – Labour

Slough (2021) – Labour

It also face an in-year financial gap in its budget which currently stands in the region of £87million. The city’s financial woes have forced council bosses to halt all spending other that services it must provide by law, such as social care and community protection. 

The council has blamed the implementation of its botched Oracle IT system – which was meant to cost £19million but has since ballooned in price to about £100million – for its desperate situation. 

Meanwhile, shocking social media photos shared over the past few months have shown disgusting piles of rubbish festering in streets across the city, amid dire warnings the situation would only get worse. 

The city’s bankruptcy declaration came after it was revealed the city had raked in £79million from its Clean Air Zone. 

In June 2021, the council – the largest in Europe – began charging motorists whose vehicles failed to meet emissions standards to drive into the city.

Birmingham City Council insisted it has invested more than £52million from its programme into hydrogen bus trials, improvements to railway stations and development of better cycling infrastructure. 

But academics cast fresh doubts on the money-grabbing Clean Air Zone scheme’s green credentials after it was revealed it failed to cut pollution by as much as predicted. 

Researchers from the University of Birmingham claimed the measure – similar to London’s hated Ultra Low Emission (Ulez) scheme – only reduced pollution by seven per cent, well short of predictions it would cut levels by 13 per cent. 

Meanwhile Birmingham’s bankruptcy crisis has plunged plans for it to stage the Euro Athletics in 2026 into uncertainty, with chiefs saying cash will only be spent on key services. The city has already set aside around £13.7million to fund the spectacle.

Researchers from the University of Birmingham have studied the effects of Birmingham's Clean Air Zone, which covers an area of the city centre within the A4540 Middleway

Researchers from the University of Birmingham have studied the effects of Birmingham’s Clean Air Zone, which covers an area of the city centre within the A4540 Middleway

The chaos triggered a furious response, with two traffic wardens being brutally battered in the street in Birmingham after they were allegedly targeted over the Labour-led council’s bankruptcy crisis.

The shocking footage, filmed on Tuesday, shows one traffic warden being kneed in the face while another has punches thrown at him in the middle of the busy street.

Onlookers said the thugs struck after claiming the civil enforcement officers had ‘no power any more’.

One witness said: ‘These guys were just doing their jobs and obviously have nothing to do with what’s going on at the council. They were saying they had no power any more around here and several idiots tried to drive them out of the area using the bankruptcy stuff as an excuse.

‘It does make you worry what’s going through these people’s heads. They haven’t got a clue and I fear things could escalate.

‘It’s like they believe the authorities have no power over them any more. What is attacking traffic wardens going to achieve anyway? It’s just moronic behaviour and it took place in broad daylight in front of families with children.’

A Birmingham City Council spokesperson said: ‘Nobody should suffer abuse or assault for simply trying to do their job and we will be contacting the company that employs the officers to ensure they are OK and see if any support is needed.’ 

A West Midlands Police spokesperson officers were investigating. Inspector Neil Kirkpatrick said: ‘No one should have to be subjected to violence in the course of their work and I’m relieved they did not suffer more serious injuries.

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‘We’re determined to bring their assailants to justice and I ask that anyone who witnessed the assault or who has information should contact us if they haven’t already done so.’

One traffic warden can be seen being kneed in the face while another has punches thrown at him in the middle of the busy street

One traffic warden can be seen being kneed in the face while another has punches thrown at him in the middle of the busy street 

Onlookers said the thugs struck yesterday afternoon after claiming the civil enforcement officers had 'no power any more'

Onlookers said the thugs struck yesterday afternoon after claiming the civil enforcement officers had ‘no power any more’ 

Mr Cotton was selected by the ruling Labour NEC to run the council in May after a report branded the party group ‘dysfunctional’.

He was criticised for not attending a council cabinet meeting in person yesterday at which the section 114 notice was confirmed.

Speaking to BBC Radio West Midlands by video-link, Mr Cotton said the council would ‘continue to deliver on essential services like children’s safeguarding and social care, social care for adults, education, waste collection, road maintenance and library services’.

He insisted statutory services would continue for the city’s 1.1million taxpayers.

Meanwhile, the city continues to be plagued by ‘rats as big as cats’ at night as rubbish piles up on the street, according to horrified locals.  

The B8 Birmingham postcode, which includes Washwood Heath, Ward End and Saltley areas, topped a council list for the highest number of pest control callouts this year.

The reason for this is due to rubbish piling up in the streets, according to traders on the famous Alum Rock Road. 

Two businesses experiencing rodent issues said they had experienced problems with missed bin collections, people leaving waste in communal areas and fly-tipping. 

One business owner told how scurrying rats were a nightmare. ‘You see them running around in the evenings when it gets dark and there are [fewer] people around. It’s really bad around here,’ he said.

While another man, who wished not to be named, said: ‘People are putting rubbish here and business is quiet. Decent people are not coming here because it’s dirty.

One image from the city appeared to show a huge dead rat underneath a Lucozade bottle

One image from the city appeared to show a huge dead rat underneath a Lucozade bottle

Huge rodents - the size of 'cats' - are regularly seen on Alum Road, especially at night

Huge rodents – the size of ‘cats’ – are regularly seen on Alum Road, especially at night

‘There are lots of problems and it has been like this for years. There are too many rats. If you come back at night they are very big. They look like cats.’

One home in Handsworth sparked outraged last month after its front garden was transformed into a huge trash heap, with rubbish spilling out onto the footpath. 

John Kent, opposition leader at Thurrock Council in Essex – which declared itself bankrupt in December – warned the people of Birmingham the problem with rubbish was likely to get worse, soon.  ‘

‘We’ve seen dirtier streets, grass being cut less frequently, our only theatre is now under threat and every subsidised bus route in the borough was just cancelled,’ he told the BBC.

He also said council tax in Thurrock soared by 10 per cent last year and was likely to balloon by the same again this year.

‘That’s the situation we will be in for many years to come. People are rightly very, very angry,’ he added. 

All new council spending in the city, with the exception of protecting vulnerable people and statutory services, must stop immediately

All new council spending in the city, with the exception of protecting vulnerable people and statutory services, must stop immediately

Birmingham City Council has declared itself effectively bankrupt after facing a £760million bill

Birmingham City Council has declared itself effectively bankrupt after facing a £760million bill

Birmingham is the latest council to declare bankruptcy, following in the footsteps of Hackney, Northampton, Croydon, Thurrock, Woking and Slough

Birmingham is the latest council to declare bankruptcy, following in the footsteps of Hackney, Northampton, Croydon, Thurrock, Woking and Slough

In July, the council was accused of overpaying taxi firms by £14million after an investigation by MailOnline revealed the authority was paying one cab company more than £200 a day to take a child three miles to school and back. 

Earlier, in May, the council outlined is bold vision to transform its famous ring road into a park in a bid to put ‘pedestrians and cyclists first’ as part of the ‘most ambitious plan in a century’ for the city.

Speaking at the time, former council boss Ian Ward revealed plans for ‘a route map to a greener city’ – which aims to double the amount of green space to see the city become ‘carbon zero’. 

Speaking to BBC Radio 4’s Today programme, he said the ring road – opened by Queen Elizabeth II on 7 April 1971 and which runs through the city centre – will still have access for cars. 

He said: ‘There’ll still be public transport and cycle routes, but they will require less space so we can green much of that ring road and turn it into a park that circles the city.’ Mr Ward insisted the 20-year plan was not ‘a war on motorists’ and that the city would become as green as Vienna. 

According to the plans for how Birmingham might look in 2040, it will double its green spaces and build around 124 miles of walking and cycling routes, placing it on a level with Denmark’s cycling haven capital city Copenhagen.  

Mr Ward insisted the 20-year plan was not 'a war on motorists' and that the city would become as green as Vienna (pictured: Traffic at Bordesley Circus, Birmingham)

Mr Ward insisted the 20-year plan was not ‘a war on motorists’ and that the city would become as green as Vienna (pictured: Traffic at Bordesley Circus, Birmingham) 

Mr Ward said the council is attracting record levels of investment into the city. Pictured, a design showing how the city might look once the green plans are implemented

Mr Ward said the council is attracting record levels of investment into the city. Pictured, a design showing how the city might look once the green plans are implemented

The plans drawn up by Birmingham city council would see trees planted into every available space in the heavily congested town centre

The plans drawn up by Birmingham city council would see trees planted into every available space in the heavily congested town centre

Yesterday, the Labour-run council issued a section 114 notice, meaning it cannot meet its financial liabilities, after it was hit by a bill for £760million to cover equal pay claims.

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The council, which is Europe’s largest local authority, confirmed all but essential new spending must stop immediately.

As news of the desperate situation unfolded, taxpayers demanded to know which services could be at risk, with fears over road maintenance, libraries and cultural projects could be in the firing line. 

Professor Tony Travers, a local government expert at the London School of Economics, said Birmingham City Council had been plagued by financial difficulties ‘on and off’ for more than a decade due to equal pay and other challenges.

Since 2012, the authority has paid out a staggering £1.1bn in equal pay claims after a landmark case was brought against it. 

It followed a ruling by the Supreme Court which backed 174 mostly female staff – working in roles such as teaching assistants, cleaners and caterers – who had missed out on bonuses give to workers in traditionally male-dominated roles like binmen and street cleaners. 

Birmingham said that cost of the pay claims was ballooning at a rate of £5million to £14million per month and it must fund the liability accrued to date but that it did not have the funds to do so. 

Speaking to BBC Radio WM, Prof Travers said: ‘Birmingham is a very important city within Britain and it is essential for the whole country that its services are good and that the city is seen to be motoring forward.

‘The risk is that the city council’s provision of services will be trimmed further and further back and that has consequences not only to what the city looks like and feels like to live in, but also the reputational hit to the city as well.’

As well as its financial meltdown, Birmingham has also previously been accused of virtue signalling after it gave six new streets ‘woke’ names.

England’s biggest council called the roads in Perry Barr: Diversity Grove, Equality Road, Destiny Road, Inspire Avenue, Respect Way and Humanity Close.

The titles were decided by a panel of judges after locals were asked to submit suggestions for the 1,400 addresses.

Birmingham City Council has been accused of virtue signalling after it gave six new streets 'woke' names

Birmingham City Council has been accused of virtue signalling after it gave six new streets ‘woke’ names

England's biggest council called the roads in Perry Barr: Diversity Grove, Equality Road, Destiny Road, Inspire Avenue, Respect Way and Humanity Close

England’s biggest council called the roads in Perry Barr: Diversity Grove, Equality Road, Destiny Road, Inspire Avenue, Respect Way and Humanity Close

The winner was Louise Kilbride from Handsworth Wood, whose theme was based on ‘cohesion and shared values for Perry Barr and surrounding areas’.

But the Labour-run council has been slammed for virtue signalling, with Brummies taking to social media to air their ’embarrassment’ at the ‘woke’ names.

One man posted: ‘Seriously!?! You could have chosen to mark some of the great people from across Birmingham’s multi-cultural community.

‘Instead THIS is what you came up with?! A series of banal buzz words for a series of roads that won’t even play host to the commonwealth athletes. WHAT A JOKE!’

Another wrote: ‘Patronising beyond belief. So out of touch. The whole set up as been at total embarrassment to the good folk of Perry Barr and Birmingham!’

Following Birmingham’s bankruptcy crisis, concerns have now been raised for the future of thousands of staff – as union bosses at Unite accused the council of ‘chronic financial mismanagement’.

Sharon Graham, Unite general secretary, said: ‘Birmingham City Council’s workers must not pay the price for the council’s or central government’s incompetence and financial mismanagement.

‘Our members undertake vital frontline services that are essential for the communities they serve and they should not be impacted through no fault of their own.

‘Unite always prioritises the jobs, pay and conditions of its members and will support those at Birmingham City Council to ensure they are not mistreated due to council and government failings.’

A worker clears the street of rubbish in Birmingham city centre on September 5, 2023

A worker clears the street of rubbish in Birmingham city centre on September 5, 2023

A Birmingham city council worker is pictured in cleaning the streets on September 5

A Birmingham city council worker is pictured in cleaning the streets on September 5 

Concerns have been raised over the impact the council's bankruptcy will have on the 1.1million people living in the city

Concerns have been raised over the impact the council’s bankruptcy will have on the 1.1million people living in the city 

Lee Wiggetts-Clinton, the union’s regional officer, said: ‘Unite is seeking urgent meetings with the council to ensure that Birmingham’s loyal workforce are not made the scapegoats for the financial crisis, which is not of their making.’

Michelle McCrossen, an organiser at GMB, which has live equal pay claims ongoing against the council, said the authority had ‘brought Birmingham to the brink’.

She said: ‘Today’s announcement is a humiliating admission of failure on the part of Birmingham City Council’s officials and leadership.

‘Not only are they responsible for creating this crisis through years of discriminating against their own staff, but even they no longer believe themselves capable of fixing it.

‘For decades the council has stolen wages from its low-paid women workers, running up a huge equal pay liability that has brought Birmingham to the brink.

‘Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and of the essential services that they provide for the people of Birmingham.’

It was announced in July that a judge-led inquiry would be launched to find what caused the equal pay bill and who was to blame for it, which is set to begin next year.

That will only begin after the conclusion of a separate governance review, announced at the same time.

This will focus on failures in the implementation of the council’s new IT system, Oracle ERP, which requires around £100m to remedy.

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