Ask someone what Birmingham leads the world in, and “government” is unlikely to top the list. Yet unlike the six other councils that have gone bust since 2021, Birmingham’s crisis has been highly visible. Headlines about uncollected rubbish, a vast equal pay liability, and civic decay are a stark contrast to the nineteenth-century era when Birmingham was widely hailed as “the best governed city in the world”. For decades, it was – its sanitary and waste systems were held up as the crown jewel of modern local government, lauded by admirers and derided as “municipal socialism” by critics.
As recently as a few years ago, politicians from both main parties were keen to claim credit for the city’s revival from the 1980s decline. Few do now. Since the council’s effective bankruptcy, enthusiasm for ownership of Birmingham’s trajectory has cooled. How did the city move from a 2022 promise of “a golden age of opportunity” to a Section 114 notice in 2023 – and streets strewn with rubbish in 2025?
Two explanations dominate: Conservative austerity and Labour council mismanagement. To test those claims, we spoke with the council leadership and local-government experts about how Birmingham reached this point and what recovery might require.
Austerity
“You cannot look at what’s happened here in Birmingham without reflecting on the fact that 14 years of austerity took a billion pounds away from this city,” Council Leader, John Cotton, told us. Almost every councillor we interviewed – including some of the sharpest critics of the leadership – made the same point. The National Audit Office has warned that nearly half of all councils face a risk of effective bankruptcy, largely due to funding pressures. As Director of the Institute of Local Government at the University of Birmingham, Dr Jason Lowther put it, “[Bankruptcies] were virtually unheard of before the financial cuts of the 2010s. It’s unlikely local government suddenly forgot how to manage money.”
But treating Birmingham purely as a generic austerity story misses the degree to which it was hit harder than most. While average council funding fell by roughly a quarter between 2011 and 2021, Birmingham’s drop was steeper – more than a third, and even larger per head. Former Prime Minister Rishi Sunak once boasted that reductions were skewed away from wealthier, smaller councils and towards more deprived urban areas. “We had the choice of whether to cut poorer councils the same as richer areas…the Government decided to cut poorer and more deprived areas more,” Dr Lowther said.
Only one councillor we spoke to rejected austerity as a cause. “Cuts to Birmingham’s budget centrally have nothing to do with the crisis. It is entirely self-caused,” argued Conservative councillor, Alex Yip. On one thing, though, opposition figures agreed – mismanagement played a part.
Mismanagement
Six months before the Section 114 notice, a government-commissioned review described a “dysfunctional climate” at the council – “personality-driven factionalism” and weak grip in key areas. Cllr Yip listed hundreds of millions lost across a range of errors. Commissioners later reported a lack of technical capacity in crucial functions, and Labour’s national leadership intervened to resolve internal leadership disputes.
Yet austerity and mismanagement are intertwined. “If the cuts hadn’t happened, would the mismanagement have happened? I don’t know,” said Liberal Democrat Cllr, Izzy Knowles. Birmingham is Europe’s largest local authority, serving around 1.1 million people with a single council – unlike Greater Manchester’s 10 councils or London’s 33. Years of cuts stretched an already huge organisation to breaking point, leaving it less able to meet residents’ needs. Knowles backs decentralising Birmingham’s unusually centralised model – an outlier among developed democracies.
There is a political dimension too. The 1980s collapse of Birmingham’s industrial base under Thatcherism rewired local politics, hollowing out Conservative support for years. After Labour’s long run, a Lib Dem–Conservative coalition took control in the 2000s. Then came the 2010 coalition’s austerity – and voters used local elections to rebuke Westminster, delivering Labour its biggest city-wide swing on record. Since 2012, Labour has dominated, usually holding around two-thirds of seats and double or triple the representation of the next party. “They’ve got a big majority, they can do whatever they want – there’s no challenge to them,” said Lib Dem Cllr Colin Green. Lib Dem Cllr Morriam Jan added that opposition voices often felt ignored.
Where Next?
Birmingham’s politics remain defined by austerity’s legacy. Funding cuts forced service reductions and tax rises. They also entrenched a decade and a half of one-party dominance – a lack of competitive pressure that can dull scrutiny and invite complacency.
What follows is uncertain. Today, Labour, the Conservatives, and the Liberal Democrats hold roughly 98 per cent of seats. In the past, a Labour slump might have implied a return to a Lib Dem–Conservative coalition. That looks less likely now. “Everybody I’ve spoken to thinks Labour’s going to lose a lot of seats – but to everyone else: the Conservatives, the Lib Dems, Reform, the Greens,” said Cllr Green. “We could be in a place where no one has a majority, but no two parties can form a coalition. It could be very interesting for political watchers – but for anyone who actually wants to run the city, next year is going to be a nightmare.”
Birmingham’s future is therefore open. The blame is shared – sustained underfunding, organisational failures, and a political culture shaped by national battles. But next May offers voters a choice. Whatever the outcome, the people of Birmingham will have the chance to decide the city’s next chapter – and whether its government can once again be a source of pride rather than decline.
