Labour’s Birmingham Council Slashes Services While Pouring £129m Into Staff Pensions

Labour-run Birmingham City Council stripped almost £150m from frontline services last year, yet still found nearly the same amount to pour into its own staff pension scheme, newly released figures show.

The authority, which effectively declared itself bankrupt in 2023, cut deeply into social care, children’s services, libraries and bin collections in 2024–25 as part of its £300m two-year savings programme.

Residents were left with fortnightly waste collections, dimmed street lights, and community centres earmarked for sale. Hundreds of council jobs were put at risk.

But while services across Britain’s second city were hollowed out, a Freedom of Information response reveals that Labour simultaneously increased pension spending to £128.7m, 86% of the value of the cuts it imposed on the public. Contributions rose by £18.7m on the previous year, despite the council claiming to be on the brink of collapse.

The pension bill, which now consumes almost a quarter of all council tax revenue, comes after Birmingham imposed a 10% tax hike on residents last year with special government permission. A further 7.5% rise followed this April after ministers refused to allow Labour to push bills up by yet another 10%.

According to the latest scheme valuation, Birmingham now pays the equivalent of 27.2% of staff salaries into the Local Government Pension Scheme—a level far beyond anything available to ordinary private-sector workers.

Meanwhile, the council’s five-year pension bill has reached £626.3m, even as it continues warning of further instability and prepares another £148m of cuts for 2025–26.

Cllr Robert Alden, Conservative representative for Erdington, said the figures expose a catastrophic failure of leadership under Labour.

“Birmingham Labour’s £150m of cuts is less than their overspend on the butchered Oracle rollout alone and less than Labour lost building the Perry Barr athletes village, which never housed a single athlete,” he said.
“No amount of reworking the figures changes the truth – Labour alone effectively bankrupted Birmingham, hitting residents with a double whammy of higher taxes for fewer services.”

The council’s Section 114 notice in September 2023—the local government equivalent of bankruptcy—stemmed from hundreds of millions in equal pay liabilities and massive overspending on its Oracle IT system. Despite that, Labour prioritised preserving one of the country’s most generous public sector pension schemes while front-line services absorbed the pain.

Joanna Marchong of the Adam Smith Institute said the situation reflects a broader national crisis in public finances.

“It speaks volumes about Britain’s broken public finances when councils are slashing vital services while pouring millions into gold-plated pension schemes,” she said.
“Bankrupt Birmingham council has hiked council tax for residents, allowed bin strikes to drag on for months, made hundreds of millions of pounds of cuts to frontline services and yet still offers a pension scheme contributing 27.2pc of salaries costing almost as much as the cuts themselves.”

“Ministers need to get serious about reforming public sector pensions so councils can prioritise frontline services for residents over unaffordable and overly generous entitlements.”

The council also faces growing scrutiny over its decision-making. A group of accounting experts has called for an independent public inquiry, claiming in a letter to Communities Secretary Steve Reed that Birmingham’s Section 114 notice was issued using unaudited and “materially incorrect accounting information”.

Meanwhile, Labour-run councils across England, including Birmingham’s 101 councillors, will soon gain access to the Local Government Pension Scheme following a new £45m plan approved by ministers, putting further pressure on local taxpayers.

Birmingham City Council did not respond to requests for comment.