Birmingham council offices Photo: Holly Adams/Bloomberg
Hundreds of thousands of households face an extra £200 in council tax bills. The news was revealed on Sunday from Europe's largest local authority.
The commissioner appointed to lead Labour-run Birmingham City Council after it declared virtual bankruptcy earlier this year told the BBC that he the tax will have to be increased by at least 10 percent.
Max Koller said such an increase was “normal” for the authorities, who issued a section 114 notice to effectively declare bankruptcy.
He suggested the increase could be as high as 15 per cent, which would add almost £300 to the average Group D bills.
A number of other councils, including Nottingham and Woking, have declared virtual bankruptcy, suggesting that their bills too are set to rise sharply.
And last week Bradford and Cheshire East said they risked section 114.
The Local Government Association has warned that one in six councils (around 60) are at risk of virtual bankruptcy.
The Labour-run body issued a section 114 notice in September as it faces a £760 repayment order. £1 million equal pay and an IT project cost overrun of £80 million.
The company says it needs to save £300 million over the next two years.
On Tuesday the leader of Birmingham's Labor council said he would write to the government asking for permission to increase council tax next year by more than 5 per cent (the usual limit) without the need for a local referendum.
Max Koller warns of council tax rise Photo: Neil Elkes/BPM Media
Speaking to BBC Politics Midlands, Mr Collier said: “Most [councils issuing 114 notices] were allowed to increase council tax by around 10 per cent, with the exception of Croydon which increased it by 15 per cent. But this requires a formal request and support from commissioners.
“An extra 5 per cent of council tax in Birmingham would raise around £20 million.”
A rise of 10 per cent would mean an increase bills of approximately £195 per annum for a Grade D property, plus GBP. 390 for the most expensive houses in the H range.
A 15 per cent increase would be around £295 for Band D or £590 for Band H.
Mr Koller also said the council would be required to identify and sell £500 million worth of assets within next 12 months.
On Thursday it emerged that council children's services would face cuts of £57 million and local authority management budgets would be cut by 50 per cent, raising fears of job losses.
John O&# 39;Connell, chief executive of the Taxpayers' Alliance, said: “Birmingham residents will rightly fear the worst after their council's finances collapse.
“Local taxpayers rightly fear they will be forced to pay for years of shocking mismanagement and risk. – action by City Hall bosses.
“Urgent action is needed to limit the damage and avoid shifting the entire burden onto household budgets.”
The GMB union votes for its members on further issues. strike in Birmingham
Responding to comments from Mr Koller, who called the vote “useless”, union labor relations chief Rhea Wolfson said: “How long do commissioners think it is reasonable to wait for our members to do something?” with the equal pay crisis?
The board needs to begin negotiating a settlement, she added, saying action will continue until the union sees “significant progress.”
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