FINANCE

Rowley orders Birmingham finance review over chaotic IT contract

A Government-imposed governance review of Birmingham City Council has been expanded after massive failures in its accounts IT system emerged.

A Government-imposed governance review of Birmingham City Council has been expanded after massive failures in its accounts IT system emerged.

Last week, it materialised that the £19m costs of an IT and HR contract, which was supposed to streamline the council's accounts, had ballooned to nearly £40m.

The Oracle contract – due to be delivered in December 2020 – is unlikely to be up and running until next year. Currently, the council's payment system is in chaos, with the finance department unable to track who owes it money.

According to sources close to Birmingham, it is thought that up to 100,000 transactions for 2022-23 could have been affected, with a further 2,000 new transactions a week going through the failing system.

Now local government minister Lee Rowley has stepped in and demanded the Whitehall governance review planned for the troubled council's housing and special educational needs and disability services be extended to cover its finances too.

The IT system was commissioned as part of the council's transformation plans and was supposed to cut £16m in spending. However, the £40m cost so far may be the tip of the iceberg.

PwC and KPMG have been brought in to resolve the issues, but one source suggested the cost of consultants and fixing the failing system could dwarf the current £40m bill – potentially doubling or more.

Strategic director of council management, Becky Hellard, who is responsible for the council's finance department, is absent from the council.

A spokesperson for the council said it was ‘not unusual' for IT systems to experience teething difficulties, but said this contract had been ‘particularly challenging'.

They added: ‘To resolve all issues, an action plan has been drawn up, governance strengthened and a new taskforce is being set up, which will be chaired by the chief executive [Deborah Cadman], with progress overseen directly by the leader of the council [Ian Ward]. 

‘In addition, the council is also actively engaging with its external auditors, who have offered to independently review the plans to ensure the implementation of the system is successfully complete.'

FINANCE

London remade

By Jonathan Werran | 04 July 2025

London has a golden opportunity to reset and reform the relationship between its boroughs and the mayoralty. Just how bold and radical this reform will be de...

FINANCE

Proud to serve the sector

By Louise Gittins | 03 July 2025

Writing in LGA Conference week, newly re-elected chair Cllr Louise Gittins reflects on the Government’s key announcements and says council leaders must have ...

FINANCE

Common sense Reform

By Paul Marinko | 03 July 2025

Reform UK is taking a measured approach to implementing change as the party takes charge of Durham Council, the authority’s new leader tells Paul Marinko.

FINANCE

Central and local government will transform the country for the better

By Georgia Gould | 03 July 2025

Writing in the week of the LGA Conference, Jim McMahon and Georgia Gould say this government was elected to deliver a decade of national renewal, and this si...

Heather Jameson

Popular articles by Heather Jameson