Residents in Birmingham will see council tax bills rise by 21 per cent over the next two years partially due to an “avoidable” IT issue, experts claim.
More than 50 councilors in Birmingham City Council voted in favour of £300million cuts last month after the local authority declared bankruptcy in 2023.
Multiple councils have been forced to raise taxes to generate revenue as communities struggle to navigate the cost of living crisis.
This hike to council tax has come about due to an escalating equal pay claim bill of around £760million and issues of a new IT system costing £100million.
The IT error in question was the council’s failure to implement an Oracle Cloud-based enterprise resource planning (ERP) and human capital management (HCM) system.
These systems replaced a highly customised SAP implementation that was introduced in 1999 but the way this transition was handled appears to have compounded the local authority’s financial woes.
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Birmingham council tax bills are set to rise by 21 per cent over the next two years
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As a result of this error, households will have to pay significantly more in council tax over the next 24 months.
Experts are sounding the alarm that other councils may be forced to raise taxes if they do not learn from the mistakes of Birmingham City Council.
Speaking to GB News, chief commercial officer Pritesh Pattni at ISB Global broke why old IT issues will cause “massive problems” for families in Birmingham for the foreseeable future.
He explained: “It’s like changing from an old phone to a new one, imagine if you got a new phone, but it couldn’t make calls or send texts — that’s what happened here with the council’s computer system.
“It is well known in the industry that moving from SAP to Oracle or vice versa is never a good idea and, in most cases, will ruin an organisation, which, to be blunt, is exactly what happened here.
“These issues aren’t uncommon. When big organisations or local authorities change their computer systems, specifically ones that are as all-encompassing as SAP, there’s often a risk of things going wrong.”
The cost of computer system overhauls, including the one carried out by Birmingham City Council, is “often severely underestimated”, Pattni claims.
He highlighted that many of the issues facing the local authority could have been “avoidable” but warned that other councils are at risk of a similar fate.
The IT expert added: “Some problems were avoidable, but others were part of a bigger issue.
“The council could have planned better, tested the new system more thoroughly, and listened to feedback from people using it.
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GETTY“Essentially it could have done a better job of the entire IT change management program. I also feel that they did not fully understand the scale and risks of the mountain before embarking on the climb.
“But there’s also a systemic issue: big organisations often rush into changes without fully understanding the impact.
“They need better processes and communication with key users of current systems prior to starting such a journey.”
GB News has contacted Birmingham City Council for comment.