Birmingham council's mismanagement 'much worse than the government thought'

Birmingham City Council, Europe's largest local authority, has effectively declared itself bankrupt by issuing a Section 114 notice. Photo: Holly Adams/Bloomberg

Michael Gove is set to send a hit squad into poor Birmingham on Tuesday after discovering the «scale of mismanagement» was greater than feared.

Earlier this month Birmingham City Council — the largest local authority in Europe — has effectively declared himself bankrupt by issuing a section 114 notice, meaning he must stop all new spending.

Mr Gove, the raising secretary, is considering appointing commissioners to take over the day-to-day running of the authority.

Officials will work with Birmingham to decide whether to sell valuable assets such as a stake in at the city airport, in an attempt to balance the books.

Birmingham City Council statistics

A government source said: “The scale of mismanagement at Birmingham City Council is much worse than we thought.”

“The council is failing in its core responsibilities and is letting local people down. This can't go on. The Secretary of State will update Parliament on the next steps to get the council back on track in the interests of residents.»

It is reported that Birmingham's flagship library, City Hall, the nearby Art Gallery, Aston Hall and Sarehole Mill Museum, who inspired J.R.R. Tolkien's performance of the Shire in The Lord of the Rings is at risk of selling out.

The council is trying to address equal pay obligations that have grown over several years. It is currently valued at around £1 billion and rising by millions of pounds a month.

It also faces an annual financial deficit in its budget, currently standing at around £87. million, and will have to spend about £100 million to fix errors when implementing a new IT system.

The city council declined to comment on the reports.