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Birmingham City Council needs a further £45m to fix ‘disastrous’ Oracle system

A document posted online ahead of Birmingham City Council’s cabinet meeting shows that more money needs to be ploughed in to fix its Oracle system.

Birmingham City Council’s report to the city council’s cabinet, which is meeting on February 27, shows that the council needs a further £45m for significant work required to stabilise and improve the operation of its Oracle ERP and HR system.

In April last year, city council leader John Cotton gave an interview to the Birmingham Mail, in which he described the “disastrous” Oracle system, which has left taxpayers with a £100m bill.

Now, 10 months on, a report prepared by Peter Sebastian, the council’s head of financial planning, shows that a further £45m is going to be needed to fix the problems, which is on top of the £85m the council has already spent.

In the report, Sebastian said that since the implementation of the Oracle system in April 2022, there have been significant issues with the processes and interfaces, as well as the system’s ability to produce what Sebastian calls “meaningful reports”. 

While there is ongoing work to stabilise and improve the operations of the Oracle finance and HR system, Sebastian noted that significant difficulties remain around the financial integrity of the finance ledger. In the report, he wrote: “Simply put, the system is still posting transactions incorrectly and significant manual work is required to ensure that the finance system is accurate.”

This, he said, has led to an additional six-month delay in closing the prior year accounts, as the finance team needed to manually adjust inaccuracies in the ledger, to ensure transactions were posted to the correct cost centres. He said the delay in closing “took up significant finance team resource and meant the production of the 2022/23 accounts were delayed”.

Sebastian added that forecasting needed to be done manually, due to what he described in the report as “continuing issues with the accuracy of the finance ledger (which finance staff have to manually correct), as well as the delay in implementing system modules that would have enabled budget holders to view and forecast their budget spend more easily”.

In addition, this has meant that budget forecasting has been carried out based on the best available data and organisational intelligence. The report shows that significant additional costs are needed to rectify these issues. Sebastian stated in the report that an additional £45m spread over two years is needed, on top of the current operating costs of the Oracle system. This is in addition to the £86m budget approved so far.

The ongoing problems with Oracle and extra costs required to fix them come at a time the city council is reportedly bankrupt and has needed to increase council tax by 21%.

In her financial statement, Fiona Greenway, director of finance at Birmingham City Council, described the council’s finances as “precarious”. Her report shows a significant budget gap of £225.9m for the 2024/25 financial year, and £67.4m for the 2025/26 financial year.

“This budget gap takes into account identified savings proposals of £149.8m for the 2024/25 financial year, and an additional £76.3m for the 2025/26 financial year. This means that the council’s net expenditure budget for the 2024/25 financial year is 24% higher than the £925m of Council Tax and Business Rates income expected for 2024/25,” Greenway stated in the report.

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