When You’ve Filled in the Hole, Stop Digging

Birmingham’s Pension Fund Farce, Officer Paralysis, and the Sheriff Who Is Coming

There is a particular kind of failure that does not explode into view. It does not shout or panic. It settles in. It becomes routine. It drains public money month after month because those in charge know something is wrong but cannot, or will not, confront it.

Birmingham City Council is now deep inside that failure.

For years, Birmingham taxpayers have been paying roughly £1.2 million every single month in so-called deficit reduction payments to the West Midlands Pension Fund. Around £14 million a year. Money extracted from budgets already stripped bare. Budgets from which day centres for the disabled have been closed, libraries shuttered, and vital public assets sold off under the banner of necessity.

The problem is no longer debatable.

There is no deficit.

There has not been one for some time.

And this is not a claim made by campaigners or armchair critics. It is the conclusion reached and repeatedly evidenced by Bailey and Clancy, both university professors, both seasoned academics with long track records in public finance analysis, and both with an inconvenient habit of being right long before institutions are prepared to admit it.

These are not bloggers with opinions. They are analysts who deal in numbers, actuarial logic and evidence. When they say there is a problem, it is because the sums no longer add up.

A Surplus Hidden in Plain Sight

At a recent West Midlands Pension Fund Committee meeting in Wolverhampton, a number of quietly explosive disclosures were made. Bailey and Clancy have documented these in detail.

Based on figures as at 31 March 2025, they calculated that what had been presented only four years earlier as a fund in deficit was in fact sitting on a surplus of £8.3 billion.

That alone should have triggered immediate action across every participating authority.

But it did not end there.

At agenda item 9, appendix C, an update covering the six months to the end of September revealed that the fund’s assets had increased from £21.4 billion to £22.5 billion. A further £1.1 billion quietly appeared as strong investment returns finally filtered through the accounts.

That pushed the surplus to at least £9.5 billion on the fund’s own figures.

Then came the most damning confirmation of all. Councillor Leslie Kaye, a Solihull Pension Fund Committee member with direct insight, confirmed that the fund is now almost 200 percent funded. In plain terms, it is holding close to twice as much as it needs to pay every pension now and into the future.

That implies a surplus nearer £11 billion.

And that is before Bailey and Clancy apply what they argue are more realistic assumptions about long-term investment returns, based on a proven 30-year net average of around 6.9 percent, rather than the fund’s stubbornly pessimistic 6 percent.

On that basis, the surplus could be closer to £15 billion.

Birmingham’s share alone is likely around £3.5 billion.

Who This Money Belongs To

This surplus does not belong to pension fund officers. It does not belong to asset managers or consultants. It belongs to the employers.

Every one of them publicly funded.

The seven metropolitan councils. The Combined Authority. The police service. The fire service. Over 700 other employers across the region, including every state school, every further education college and almost all universities.

Which means the taxpayer.

If you pay income tax, council tax, National Insurance, VAT on a Mars bar from your local shop, or any other tax at all, this is your money.

And yet Birmingham continues to shovel £1.2 million a month into a hole that was filled years ago.

How the Error Became a Scandal

The origins of this mess are now clear.

The pension fund persistently underestimated long-term investment returns and massively overestimated liabilities. It mistook short-term weather for long-term climate. It saw form and ignored class.

On top of that sit management expenses now running at £142 million a year, quietly revised upwards again at the same meeting. These costs compound year after year, bleeding value while surplus piles up.

Errors happen. That is not the scandal.

The scandal begins when the error is known and nothing changes.

Birmingham Knows, But Does Nothing

By September, Birmingham City Council knew it was paying around £14 million a year to address a deficit that did not exist.

This was acknowledged internally.

And yet nothing happened.

No halt to payments. No demand for recertification under Regulation 64A(b)(iii) of the LGPS Regulations 2013. No escalation. No challenge.

Why?

Because the council’s political leadership and its appointed senior officers do not know what to do about it. Confronting pension fund orthodoxy requires competence, confidence and effort. Doing nothing is easier.

From October to December 2025, the payments continued. January, February and March 2026 will follow unless someone intervenes.

This is paralysis masquerading as caution.

When the Sheriff Arrives, He Will Already Know the Names

You do not have to be a genius to work out who the new sheriff is likely to be after May. Nor do you need much imagination to anticipate his temperament. This will not be a ceremonial sheriff. This will be a sheriff with something to prove.

He will want to demonstrate, quickly and unmistakably, whose side he is on.

And if he is looking for a case that travels, one that echoes beyond Birmingham, he will not struggle. All he has to do is look at the appointed senior officers still standing, clutching an obscenely overfunded pension scheme in one hand, and a record of closed services, sold assets and social damage in the other.

Councillors will largely be gone. Many will not even be on the council, let alone in charge of it.

The people who remain, and who will be asked to explain themselves, will be the officers.

Not just finance officers.

Policy officers.

Statutory officers.

Senior managers whose job it was to advise, to challenge, and to stop obvious waste once it was known.

Why This Will Not Stop at Finance

There is a comfortable myth in local government that accountability stops with the Section 151 officer. That everyone else can say, “That wasn’t my lane.”

That myth collapses once knowledge enters the system.

Once it was known there was no deficit, this ceased to be a narrow accounting issue and became a matter of corporate governance. Policy advice that allowed inaction to continue is not neutral. It is contributory.

Low-ranking police officers are routinely investigated, disciplined and sometimes prosecuted for failures of judgment, failures of oversight, or failures to act. Nobody accepts complexity as an excuse.

If that standard is good enough for a constable, it is good enough for the most senior officers in local government.

The sheriff will understand that instinctively.

The Sheriff’s Toolkit, Every Route Is Lawful

If the sheriff wants to act, the law already gives him multiple tracks. He does not need to rely on one mechanism.

Best Value Failure

Continuing to pay £1.2 million a month once the deficit was known not to exist is a textbook breach of the Best Value duty under the Local Government Act 1999. A targeted inspection can name officers, fix responsibility, and be referred to the Secretary of State.

Civil Action by the Council

Armed with those findings, the Council can pursue civil claims against serving and former officers for negligence and breach of fiduciary duty. Councils can sue their own officers. Resignation and retirement do not extinguish liability.

Loss is easily quantified. £14 million a year tends to concentrate minds.

Misfeasance in Public Office

This is the route that causes sleepless nights.

Once officers knew the deficit did not exist, allowing payments to continue without challenge, recertification or escalation risks crossing from error into reckless indifference. Misfeasance is not confined to finance officers. Senior policy and statutory officers are not insulated by job titles.

Personal liability is not guaranteed, but it is no longer fanciful.

External Audit and Public Interest Reports

Public Interest Reports can name names, attribute responsibility and publish findings that follow officers for the rest of their careers. For those expecting a smooth transition into consultancy, this is often fatal.

Professional and Regulatory Referrals

Accountancy bodies and professional regulators are unsentimental. Findings of incompetence or breach of duty can end professional standing entirely. That is not punishment. It is consequence.

Leaving Will Not Save Anyone

This is the mistake officers most often make.

They assume that if matters turn ugly, they can leave quietly and let the institution absorb the damage. That assumption belongs to a different era.

The payments were made.

The knowledge existed.

The inaction is documented.

The sheriff will ask three questions.

Who knew?

When did they know?

Why did nothing change?

The answers will determine everything that follows.

A Quietly Terrifying Ending

There was never much of a hole to fill in the first place. It was filled years ago. Yet Birmingham keeps digging, not because it has to, but because stopping would require admitting error and taking responsibility.

The money is there. The evidence is there. The paper trail is there.

And soon, very likely, the sheriff will be too.

He will not need to shout. He will not need to threaten. He will simply allow the law to walk, slowly and methodically, through decisions that were made, warnings that were ignored, and money that should never have been paid.

Those who know they are involved already understand what that means.

The only remaining question is whether anyone intends to stop digging before the sound carries.