Commissioners will be appointed to take over Birmingham City Council and a local inquiry will be launched into the authority after it declared itself effectively bankrupt.
Communities Secretary Michael Gove said he was "satisfied that Birmingham City Council is failing to comply with its best value duty" after it issued a Section 114 notice.
The report, outlining the authority's proposed financial recovery plan after it issued a Section 114 notice earlier this month, said work to address the situation "must be urgent, will involve hard choices" and "will result in a smaller organisation". "Throughout this we must remain focused above all on our citizens, protecting our vulnerable residents and communities, and must always put their needs first."
The document, issued on behalf of council chief executive Deborah Cadman, continued: "Our work to address the situation must be urgent, will involve hard choices about what we deliver, how we operate, and the shape and size of the organisation.
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