Birmingham tax rises

As an object lesson in how not to run a local authority, the experience of Birmingham would take some beating. The Labour-run city council is bankrupt and intends to raise taxes by 21 per cent over the next two years.

This in itself is unusual since council tax increases above 5 per cent are unlawful in England without a referendum. Yet Birmingham has been allowed by Michael Gove, the relevant minister, to breach the cap “in exceptional circumstances”.

Some of Birmingham’s difficulties stem from an extraordinary Supreme Court ruling that for years the council had failed to meet its obligations under equal pay legislation. It should have paid women working as home helps, cooks and cleaners the same wages and bonuses as men in jobs such as refuse collectors, street cleaners and grave diggers.

The ruling and the extension of a time limit to claim from six months to six years left the council facing a huge compensation bill. But this is only part of the story. A failed IT system needs to be replaced at a cost of £100million, transport costs for taking children to school rose dramatically and the bureaucracy has grown like Topsy.

The council will receive a £1.25billion bailout from the Government, which needs to be repaid with a mixture of service cuts, asset sales and tax rises. Inevitably, the axe will fall heaviest on front-line services rather than supernumerary admin jobs. All this will happen without input from the local people who will have to pay much higher taxes to sort out this mess.

Since the law requires referendums in such circumstances, the Government should insist one is held. Otherwise what was the point of the measure in the first place?