Equal Pay latest - Strengthening Governance and Organisational Capability and Capacity

Published: Wednesday, 5th July 2023

Birmingham City Council has experienced recent, high-profile, instances of failure in terms of both the implementation of the Oracle ERP system and the unsustainable growth in its Equal Pay liability.

This is currently estimated at between £650m to £760m.

In response, the council’s leadership intends to adopt the following measures to improve governance and strengthen organisational capacity.

The council will strengthen its strategic capability and capacity by appointing three Strategic Expert Advisers to support the council’s Directors and Cabinet in relation to the following areas (for further information see the notes section).

  1. Industrial relations
  2. Financial resilience
  3. Risk management
  4. Good governance, culture change and service Improvement
  5. Digital and Strategic IT implementation

The council will formally commission an independent Governance Review (in collaboration with the Department for Levelling-Up, Housing and Communities) this week, to focus upon areas including the Oracle implementation and Equal Pay.

Alongside the Governance Review, the council has commissioned an Independently Chaired, Internal Management Review to ascertain the root causes of the failure to effectively implement Oracle.

Given the scale of the potential liability relating to Equal Pay and the sums that have already been paid out in relation to this issue (in the region of £1bn) over the last 11 years, a judge-led inquiry will be commissioned to determine the causes of how the equal pay liability has continued to grow since 2012 and who is accountable. It is envisaged that the inquiry will begin in the Spring of 2024 pending the outcome of the Governance Review referred to above.

In order to grip the council’s financial position, mandatory spending restrictions will be implemented. Non-essential spending will cease with immediate effect.

Birmingham City Council leader Cllr John Cotton said: "I've been clear from day one that I will take whatever action is needed to address the substantial challenges facing the council and these measures are essential to grip the situation - particularly in terms of financial controls, organisational capacity and improved governance. We will be open and transparent throughout this process and the independent reviews and judge-led inquiry will ensure that there is proper accountability for these failings."

Birmingham City Council deputy leader Cllr Sharon Thompson added: "This is one of the biggest challenges this council has ever faced, and we must understand how the issues have arisen to prevent a repeat in the future. Given the scale of this challenge, we must impose mandatory spending restrictions. But as we have done throughout the cost-of-living crisis, we will continue to focus on tackling social injustice and inequality across our city. We will do everything we can to protect the services our residents rely on."


Strategic Expert Advisers

  1. The council proposes to create three Strategic Expert Advisers (SEAs) who will support the council in the areas referred to above and associated Governance.
  2. The primary purpose of the SEAs will be to support Directors and the Cabinet to deliver the change that is required to improve organisational performance and outcomes for citizens. It is anticipated that the SEAs will be senior leaders with a substantial track record of delivering successful outcomes in a public body.
  3. It is envisaged that the SEAs will support the work streams set out below bringing independent judgement, external perspectives and advice on issues of strategy and performance:
    1. financial resilience
    2. industrial relations
    3. good governance, culture change, service improvement and Digital and Strategic IT implementation
  4. The activity relating to each workstream will feed into an overarching Strategic Delivery Board, populated by the SEAs and members of the Council Leadership Team, that will meet monthly.

Governance Structure and Reporting

  1. A new Strategic Delivery Board will be created, that will develop and deliver plans for improvement in relation to the 3 work streams identified above. The Strategic Delivery Board will report on a monthly basis to a meeting of the Executive Management Team (which contains both Cabinet Members and Directors). The work deriving from the Financial Resilience work stream will also report directly into a Member-led Financial Oversight board.
  2. To ensure openness and transparency, it is proposed that the SEAs produce an independent report to the council’s public Cabinet meetings on a quarterly basis with an update on progress and an analysis on whether there is adequate grip and pace in relation to the delivery of the change that is required, relative to the 3 workstreams.
  3. The outcome of the SEAs quarterly report to Cabinet will also be communicated to the Secretary of State and Permanent Secretary at the Department for Levelling-Up, Housing and Communities.
  4. It is envisaged that the SEAs will closely collaborate with external support that is already in place assisting the Council, such as independent financial expert (Ian O’Donnell), governance expert (Robert Milford) and SEND Commissioner (John Coughlan).
  5. The work of the SEAs will also be informed by the:
    1. Governance Review (instigated in collaboration with DLUHC covering issues including Financial Management, Oracle, Housing and Equal Pay).
    2. BCC commissioned independent Management Review to understand the failures that led to the deficiencies in the implementation of Oracle.
    3. Judge-led inquiry into the causes of the issues relating to Equal Pay.
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