Rob Horsfield argues that austerity has brought Birmingham city council to its knees and poses a threat to local democracy across the UK

The salient fact of the Birmingham city council disaster is that the spending power of the largest single borough council in Europe, managing a city larger than Amsterdam, has fallen by 60% in real terms since 2010. This has happened despite the Birmingham economy being 36% larger than it was ten years ago. Birmingham has been forced to issue a section 114 notice declaring virtual bankruptcy.

Tory cuts provide the explanation for why Birmingham has been brought to bankruptcy. The media has tried to label the council as incompetent. And it’s true that the £760m equal pay claim the council is saddled with as a consequence of underpaying its female staff for years hasn’t helped. Nor has the fivefold overspend on the Oracle IT system – from a £19m estimate to costing £100m – for local authority employees. Yet, these issues could have been managed, if not for the swingeing budget cuts of the Tories. To add insult to injury, the commissioner brought in to dissect Birmingham’s finances will be charging £1,100 a day to uphold the Tory claim that the council collapsed purely because of its own dysfunctionality.

Local democracy under threat

Birmingham’s financial breakdown in a time of growth indicates the contempt that the Tories have for local democracy. Being unable to raise money directly except through the regressive council tax, Birmingham was barred from taking advantage of the increase in foreign investment, the highest outside London. Instead, the council had to rely on steadily decreasing government grants and revenues from its large but shrinking property portfolio. At the same time, social-care services faced increased demand from people going through the hell of poverty and destitution in the city with the highest rate of unemployment in Britain and some of its most deprived areas.

Every council is experiencing similar pressures, with at least 26 councils reporting that they think they will issue section 114 notices in the next two years. The Conservative government has reflexively announced they will refuse to provide any extra funding to make up for the deep cuts imposed on Birmingham. Nationally, this means that as local councils go bankrupt, decision making at the local level will be taken away from democratic bodies and will be given to commissioners appointed in Westminster.

Fire sale of assets

Councils are being forced to meet increased expenditure by selling assets. For example, Birmingham city council sold its stake in the National Exhibition Centre when it first began to settle equal pay claims back in 2012. Many councils have already gone through the stage of selling off assets that could be loosely considered superfluous some time ago.

In 2015, Oxfordshire County Council Leader, Ian Hudspeth, took David Cameron apart after he upbraided the council for making cuts to social services. Eight years later, British society is at a stage far beyond selling off the family silver, as Harold Macmillan described Thatcher’s privatisation policies in 1985. British capitalism is metabolising the connective tissue of everyday life.

It is predicted that the new City Library as well as the 18.7% stake in Birmingham International Airport, and the best cuts of its 6,500 properties and 26,000 acres of land are to be sold off. This will weaken the council’s ability to generate revenue in the future. Job losses are almost certain, as is a significant increase in council tax. The former will profoundly damage already disintegrating public services; the latter will hit people during a cost-of-living crisis where incomes have been suppressed by the anti-trade union laws and an unprecedentedly right-wing conservative government. As usual, the people most affected by this had nothing to do with the current situation in Birmingham, as will be the case in other places where councils will issue their own 114 notices.

Bring down the Tories

The crisis in Birmingham is a direct result of austerity and it impacts upon the lives of the most vulnerable people hardest. To restore council budgets, local democracy and meet peoples’ needs, we need government change and system change.

The Tories have to be kicked out for sure, but we can’t allow Starmer to avoid grasping the nettle of disintegrating local government. Being ‘fiscally responsible’ and licking the bankers’ boots is not going to meet the change we need.

Austerity has to end, and we need to rebuild local democracy by taxing the rich and giving back a share of the millions being generated in our communities. Getting Labour’s council leaders to take up this challenge makes sense. But if they won’t do it, we need the public-sector unions and campaigning groups like the Peoples’ Assembly to take the lead.

Uniting trade-union and community power is the only way we can win.