Birmingham council “sheds bankrupt tag” as leader unveils new budget
John Cotton says city is lifting Section 114 notice, announces £130m frontline investment and 4.99% council tax rise
Last updated 3rd Feb 2026
Birmingham City Council has published its budget for 2026–27, with the authority’s leader saying the city is moving beyond its financial crisis and is now in a position to invest again in services.
Councillor John Cotton said the new financial plan “sheds the bankrupt Birmingham tag” and marks the point where the council is lifting its Section 114 notice.
“This is a budget that sheds the bankrupt Birmingham tag and also ensures that this council is lifting the section 114 notice,” he said. “This is because we’ve taken some tough steps over the last two years to eliminate a 300 million hole in our budget that I inherited when I became leader in the May of 2023 and also to finally tackle the equal pay liabilities that have dogged this council for many years.”
He said the council is now able to announce “£130 million of new investments in frontline services”, calling it “a really important moment for Birmingham and testament to the hard work that’s taken to bring us to this point.”
Cotton said the turnaround had come from difficult decisions made over the past two years, “The principal reason is that we have taken some very tough decisions over the last two years in this city to bring the budget back into balance,” he said. “That did mean taking tough decisions around cuts to some services and also around how we change the way that we do business, so driving more efficiencies out of the organisation, making more use of technology, working in collaborative and different ways with businesses and with other parts of the public sector. And that’s how we’ve removed that 300 million hole.”
He also pointed to changes in national funding, “We now have a government that’s starting to turn that around,” he said, adding that a three-year financial settlement means “we can plan for the medium term. That makes budgeting a lot more easier and it means that we can talk about how we invest again.”
For residents, Cotton said the change means “you now have a council that’s back in the mainstream of local government.”
“We have a balanced budget, that means we can plan for the longer term,” he said. “This council is now, because it’s financially stable, can be a proper partner” in bringing jobs, homes and opportunities to the city.
The budget includes a 4.99% rise in council tax. Cotton said he was “very sorry” large increases had been needed in recent years but defended the move.
“I’m not going to repeat those mistakes, which is why we’ve been prudent and sensible when it comes to taking the 4.99% council tax increase,” he said. He added that a council tax support scheme means “1/4 of the 461,000 households in this city get some support with their bills and the 75,000 poorest households in the city are exempt altogether from council tax.”
Cotton also addressed the ongoing bin workers’ dispute, saying he was “very disappointed” a settlement had not yet been reached.
“We’ve put several fair and reasonable offers on the table through ACAS over the last year,” he said. “But our door remains absolutely open to further discussions around a negotiated settlement, but that has to be on the basis of a realistic understanding of the challenges that this council faces.”
He said he hoped a deal could be found but stressed it must not “put at risk all the progress that’s been made in turning the finances of this council around.”