Good morning. Today Michael Gove, the housing secretary, is expected to appoint commissioners to take over the day-to-day running of Birmingham city council – the biggest local authority in Europe – after it effectively declared itself bankrupt.
It’s a big deal for the people of Birmingham – as it will probably lead to higher council tax and a reduction in services – but also for the rest of the country with dozens of other local councils also teetering on the brink of collapse.
It is the result of a decade of government-imposed austerity cuts – which have seen council’s central government funding drop by 60% – as well some creative, courageous and perhaps cavalier management in town and city halls across the country.
For today’s newsletter, I’ve asked Jessica Murray, the Guardian’s Midlands correspondent, to explain how the UK’s second-biggest city found itself in such a mess. Also, economics correspondent Richard Partington explains why so many councils are in financial trouble, and how they might find a way back.
First, the headlines.
Five big stories
Metropolitan police |Scotland Yard has said it will take years to root out rogue officers serving in the capital as “the size of a small police force” is suspended or on restricted duties. The Met revealed that 201 officers were suspended and 860 were on restricted duties.
Politics | Boris Johnson described his political allies as “The Munsters” after he quit as foreign secretary over Theresa May’s proposed Brexit deal, it has been claimed in a new book. He also joked that he had “cornered the market in sex pests” among his supporters
Canada | Justin Trudeau has said there is “credible evidence” India is responsible for the alleged assassination of Hardeep Singh Nijjar, a prominent Sikh leader in Canada. The prime minister said he raised the issue “in no uncertain terms” with the Indian prime minister.
Russell Brand | Police have received a report of an alleged sexual assault in relation to the media reporting of allegations against Russell Brand, Scotland Yard has said, while the comedian has postponed his ongoing one-man show.
Media | After months of conjecture surrounding who would replace Edward Enninful, the outgoing editor of British Vogue, Condé Nast has told the Guardian that London-born journalist Chioma Nnadi will take over the role in October.
In depth: ‘To balance the books they will cut services, raise council tax and charge more’
“A lot has changed in a year,” says Jessica, who lives in Moseley, in the south of Birmingham. “The city was really buzzing during the 2022 Commonwealth Games, it had really come alive and there was a great atmosphere.
“That’s all been wiped away now, and replaced by concerns about the city effectively being bankrupt and what it means for residents and council services. Everyone has a lot of questions.”
While the Commonwealth Games hysteria is definitely over, the city is still plastered in adverts for the event with the tagline: “Be Bold, Be Birmingham”. Some are questioning whether Birmingham council might have been too bold in its decision-making and helped push the city into bankruptcy.
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How can a council go bankrupt?
Good question. And actually, technically, they can’t. After lots of media outlets published stories that Birmingham had gone bankrupt earlier this month, the House of Commons Library published a helpful guide explaining that “UK local authorities cannot go bankrupt”.
Instead, councils can issue a “section 114 notice” if they fear that their outgoings are going to exceed their income. The responsibility to issue the section 114 notice belongs to the council’s “section 151 officer” who can make the decision without discussing it with the council’s chief executive or political leaders.
The officer issued the alarm on 5 September – while the council’s Labour leader John Cotton was on holiday in New York for his 50th birthday. The notice warned that the council expected a £87.4m deficit for the 2023-24 financial year, ballooning to £164.8m in 2024-25.
“It’s an admission that the council can’t balance the books, and instructs the council to come up with a new budget plan within 21 days (that’s 25 September),” says Richard, who wrote this helpful explainer. “It sends a powerful signal to central government that an authority is in dire financial straits.”
Gove has clearly seen the signal, and is today expected to appoint commissioners to intervene in the running of the council. The department for levelling up, housing and communities said: “We continue to engage regularly with Birmingham city council, as we have done in recent months, over the pressures it faces, including around its equal pay liability, and have expressed serious concern over its governance arrangements.”
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What caused Birmingham’s shortfall?
Jessica says debate over the cause of the problem has become political, and the answer “depends on who you’re asking”.
Rishi Sunak put the blame squarely on Labour telling the House of Commons that the party had failed “hardworking people, losing control of taxpayers money, and driving their finances into the ground. They’ve bankrupted Birmingham, we can’t let them bankrupt Britain.”
However, the council says the problem has been caused by central government funding cuts that have hurt councils across the country as well as a list of issues more unique to Birmingham. The council has had to pay out more than £1bn as a result of an equal pay ruling that found female employees missed out on bonuses paid to men, and could face a further £650m-£750m in related claims. Problems with a new IT system could also cost £100m to fix.
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What happens now?
In two words: cuts and taxes. “In order to try and balance the books they will have to cut council services, and raise council tax, and charge more for council services like parking,” says Richard. “They’ll whack up the charges on everything.”
Councils are prevented by law from increasing council tax in the middle of the year, but they can increase it from next April. The government has ruled that council’s can’t increase council tax by more than 5%, but councils can ask for special permission to raise taxes by more if they’re in serious financial distress.
Croydon, Slough and Thurrock councils have been permitted to increase their taxes by as much as 15%.
Core statutory services like refuse collection, schools and adult social care will continue, but Richard warns that other councils in financial distress “funding for just about everything else is cut.”
“If you hadn’t already seen the crumbling of your local area, a section 114 really finishes it off,” he says. “In Woking they are closing all the public toilets, selling all sports pavilions, closing a swimming pool, and stopping community grants schemes that help charities supporting victims of domestic violence and run transport services for the elderly. They [are] also stopping supporting community events for Diwali or Chinese New Year.”
As well as raising taxes, and cutting services, the council will also be expected to sell assets to raise funds. It has already sold a number of key assets, including the National Exhibition Centre (NEC), now some residents fear what else could be sold.
“Its stake in Birmingham Airport could be sold,” Jessica says. “There are fears for libraries, museums and art galleries. People fear that they’re going to lose all these things that are so important to Birmingham.”
Andy Street, the mayor of the West Midlands, sought to reassure residents, tweeting: “The idea of Birmingham city council selling its cultural assets to help its finances seems a red herring – & something I’d be totally against. An asset sale for an authority so rich in land is absolutely right – but I’m sure the focus will be on sites & land of strategic value.”
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Could your council be next?
Steve McCabe, Labour MP for Birmingham Selly Oak, said: “I am embarrassed that this has happened in Birmingham. But we have got to be realistic, this is not just a Birmingham problem, this is happening all over the country.”
At least 26 councils in some of Britain’s most deprived areas are at risk of effective bankruptcy within the next two years, according to the Special Interest Group of Municipal Authorities (Sigoma) – a collective of 47 urban councils.
Moody’s, the global credit rating agency, has said it expects more councils to fail owing billions of pounds in debts, and published a list of the 20 most indebted in England relative to size. Top of the list is Spelthorne borough council in Surrey (where Kwasi Kwarteng is MP and the Conservatives have the biggest group on the council) with almost £1.1bn of debts worth almost 87 times its annual income.
“The only way to turn this crisis among councils around will be to pump in a huge investment,” says Richard. “And there’s a reluctance to increase taxes to pay for this sort of thing, so we will see more councils fail.”
What else we’ve been reading
The truth about your beloved bacon butty. Amy Fleming takes a deep dive into the world of nitro-meats and investigates if there are any tasty alternatives. Nazia Parveen, acting deputy editor, newsletters
It launched the careers of David Mitchell, Robert Webb, Jesse Armstrong, Sam Bain and Olivia Colman – but it nearly got cancelled. Two decades since its first episode aired, the stars of Peep Show reflect on the show that made them. Rupert
Kenyan astronomer Susan Murabana hopes she will live to see the day when an African woman makes it to space, as she tours her country inspiring a love of science and astronomy among young people, particularly girls. Nazia
“We never stopped protesting”. Young Iranians tell Deepa Parent about secret acts of defiance ahead of the first anniversary of the death of Mahsa Amini, who died in police custody after she was detained for allegedly wearing the Islamic headscarf incorrectly. Rupert
Take a step into the murky world of shadow tankers with Jonathan Yerushalmy and Haylena Krishnamoorthy as they investigate fleets of vessels, willing to defy international sanctions to ship millions of barrels of oil around the world. Nazia
Sport
Football | It’s “red alert” at Old Trafford, writes Barry Glendenning in the most recent edition of Football Daily. After a woeful start to the season and a litany of off the pitch problems, how long until Erik ten Hag is on the hot seat? Sign up here to get our daily football newsletter every weekday.
Athletics | Ethiopia’s Gudaf Tsegay broke the world record in the women’s 5,000 metres at the Prefontaine Classic in Oregon, USA on Sunday by nearly five seconds. Tsegay timed at 14:00.21, smashing her personal best by 12 seconds.
Cricket | Batsman Jason Roy is reportedly questioning his international future after being dropped by England at the 11th hour for the second time in a year. “I’m sure he’s got some thinking to do over the initial disappointment. It’s not an easy pill to swallow,” England selector Luke Wright said.
The front pages
The Guardian leads with “Met warns it will take years to clear out rogue officers”. The Financial Times takes a similar line with “Met examines 1,600 staff for alleged abuses against women”.
The Telegraph report on possible new health regulations under the headline “Doctors will be forced off picket lines”. The Mail has more on the Labour leader’s plan to renegotiate deals with the EU, with “Proof you can’t trust Starmer on Brexit”.
The i reports “Police examine new Russell Brand sexual assault claim as live tour axed”, while the Times says “Woman goes to Met Police after Brand investigation”. The Mirror leads off with “New Brand assault claim”, while the Sun has a full page picture of the comedian and asks “How many more?”
Today in Focus
The horrifying allegations against Russell Brand
Despite multiple falls from grace, Russell Brand became a ubiquitous presence in the British media as a TV and radio presenter and comedian. But now he has been accused of rape, sexual assault and emotional abuse. The allegations against him come from a number of women. Nosheen Iqbal hears how alongside serious assaults, former colleagues say his inappropriate behaviour on and off air went unchallenged.
Brand denies the allegations and senior news reporter Alexandra Topping explains why many of Brand’s followers believe his “alternative” views mean there is a conspiracy to bring him down.
Cartoon of the day | Karan Mehta
The Upside
A bit of good news to remind you that the world’s not all bad
Mike Parish met his partner Tom when he was 19, and the two were together for 40 years until Tom died of dementia last year. But for most of that time Parish hid his sexuality – he spent four decades in the fire brigade, but never told his colleagues. One year, terrified that he had slipped up, he opened all the Christmas cards he had written to check that he hadn’t added Tom’s name to them. They even avoided holding hands in public. But when Parish became Tom’s carer everything changed, and it forced him to go public with their relationship.
It also led him to start a community interest company to support LGBTQ+ people with dementia and their carers. While caring for Tom, he was sometimes mistaken for his son, so he began to give talks to local organisations about the challenges faced as an LGBTQ+ couple in the care system. When he contacted Deep, the UK network of dementia voices, and asked if there were any LGBTQ+ dementia groups, he was told: “Not really. Why don’t you start one?” Last year, with a few like-minded people he has met along the way, Parish co-founded the LGBTQ+ Dementia Advisory Group, to “improve the lives of LGBTQ+ people who are affected by dementia”.
Sign up here for a weekly roundup of The Upside, sent to you every Sunday
Bored at work?
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