Lincolnshire authorities reassure residents as Birmingham Council faces bankruptcy

Local authorities in Lincolnshire have reassured residents about their financial stability in light of the news Birmingham Council has effectively declared bankruptcy.
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The West Midlands authority has announced all new spending would be halted, except for protecting vulnerable individuals and maintaining statutory services.

However, Lincolnshire leaders and officials emphasised the challenges faced by Birmingham Council are “very specific” and not indicative of wider trends. They assert Lincolnshire residents have no cause for concern.

Birmingham Council, the largest local authority in Europe, has a budget gap of £87 million, and was facing huge costs relating to equal pay claims which it could not pay.

Coun Martin Hill, Lincolnshire Council leader. (Photo by: Local Democracy Reporting Service)Coun Martin Hill, Lincolnshire Council leader. (Photo by: Local Democracy Reporting Service)
Coun Martin Hill, Lincolnshire Council leader. (Photo by: Local Democracy Reporting Service)

However, the coronavirus pandemic and the cost-of-living crisis has placed heighted strain on councils throughout the UK.

In February, the majority of local authorities in Greater Lincolnshire raised their tax rates to the maximum allowable level in an attempt to mitigate soaring energy and construction costs.

Local authorities have also faced diminished financial support from the central government, with a 17.5 per cent decrease in ‘spending power’ from fiscal years 2009/10 to 2019/20, before a subsequent partial recovery.

However, as of 2021/22, it remained below the levels seen in the late 2000s.

Lincolnshire councils say they have taken measures to ensure they will be able to balance their budgets.

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Coun Martin Hill, Lincolnshire Council leader, said: “Despite the financial challenges we’ve faced over the last few years, Lincolnshire Council remains in a stable position thanks to our careful management.

“As a result, there are no plans to cut services in the current or future years. Our council tax rate remains one of the lowest in the country and will continue to be reviewed annually as part of our usual budget setting process.”

Emma Foy, West Lindsey Council director of corporate services, said: “West Lindsey set a balanced budget for 2023-24 and is operating within that budget with no risk of immediate financial insustainability.

“The council is currently updating its medium-term financial plan to report to our October corporate policy and resources committee meeting.

“We understand Birmingham has experienced some very specific challenges over recent periods specific to them as an authority.”