Council's IT system-fix to cost £90m, report says

Fixing Birmingham City Council's troubled IT system could cost the taxpayer more than £90 million, a report has found.

The Oracle program has been plagued with issues, with a new report finding that the it is now "unlikely" to be working until 2026 at the earliest.

Going live in April 2022, the system was designed to help streamline payment and HR processes.

Opposition politicians have denounced the council over the debacle for an "abdication of responsibility on a grand scale" that has resulted in "ever-increasing council tax bills".

However, while conceding the report makes of "difficult reading", a council spokesperson said the team dealing with the problem was making "significant progress" in understanding the issues with the system.

Costs have almost doubled since June 2023, when the council sought £46.5m to fix the system.

The authority is also still under significant financial pressure after effectively declaring itself bankrupt in September 2023, citing the cost of the project alongside a huge equal pay claims issue.

In 2023, the council said the equal pay bill had spiralled to £760m but, ahead of a deal announced to settle thousands of claims in December, Max Caller, the lead commissioner appointed by the government to oversee the financial recovery of the council, said the bill to settle could be below that.

Concluding the latest report, auditors Grant Thornton, said the IT project was a "contributory factor" to the authority's financial woes, rather than being fundamental to the issues.

The report was critical of the way the body designed and implemented the program, as well as how it managed financial pressures after issues were found.

Auditors found some staff may have felt incentivised to only report "good news" back to their seniors, which likely contributed to a lack of transparency in progress reports.

They said their most serious concerns about the current system is that it cannot produce reliable financial reports or account for cash and income without "significant manual input".

Following the report, a council spokesperson said the authority will "take on board" its findings.

"It is an important document that sets out clearly where mistakes have been made, the significant impact they had and how we must learn from them," they said.

"We are making significant progress on the reimplementation of the Oracle system and getting our finances back on track.

"We have worked to significantly strengthen governance, to understand the issues within the system, and to learn lessons from what went wrong."

The report, which was first handed to the council on 11 February, confirmed council taxpayers will have to fund the required £90m, which is on top of the £19m originally set aside for Oracle.

Taxes are already set to increase by 7.49% from April, after the government intervened to stop a requested 10% hike, last week.

Robert Alden, leader of the opposition and Birmingham Local Conservatives, said: "From prior to the initial decision, through implementation, and whilst the early warning signs of impending disaster were starting to show after go-live, the council ignored opposition councillors, their own staff, and even the expensively procured consultants they hired," he said.

"This was an abdication of responsibility on a grand scale and the costs have yet again been laid on the doormats of Birmingham residents receiving ever-increasing council tax bills."

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