Britain’s second-biggest city effectively declared itself bankrupt on Tuesday, shutting down all nonessential spending after being issued with equal pay claims totaling up to £760 million ($954 million).

Britain’s second-biggest city effectively declared itself bankrupt on Tuesday, shutting down all nonessential spending after being issued with equal pay claims totaling up to £760 million ($956 million).

Birmingham City Council, which provides services for more than one million people, filed a Section 114 notice on Tuesday, halting all spending except on essential services.

The deficit arose due to difficulties paying between £650 million (around $816 million) and £760 million (around $954 million) in equal pay claims, the notice report says.

The city now expects to have a deficit of £87 million ($109 million) for the 2023-24 financial year.

Sharon Thompson, deputy leader of the council, told councilors on Tuesday it faces “longstanding issues, including the council’s historic equal pay liability concerns,” according to the United Kingdom’s PA Media news agency.

Thompson also blamed in part the UK’s ruling Conservative Party, saying Birmingham “had £1 billion of funding taken away by successive Conservative governments.”

“Local government is facing a perfect storm,” she said. “Like councils across the country, it is clear that this council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates incomes, to the impact of rampant inflation.”

“Whilst the council is facing significant challenges, the city is very much still open for business and we’re welcoming people as they come along,” she added.

A spokesperson for UK Prime Minister Rishi Sunak told reporters on Tuesday: “Clearly it’s for locally elected councils to manage their own budgets.” The spokesperson added that the government has been “engaging regularly with them to that end and has expressed concern about their governance arrangements and has requested assurances from the leader of the council about the best use of taxpayers’ money.”

The council’s leader John Cotton elsewhere told the BBC that a new jobs model would be brought into the council to tackle the equal pay claims bill.

The multicultural city is the largest in central England. It hosted last year’s Commonwealth Games, a major sporting event for Commonwealth countries, and is scheduled to hold the 2026 European Athletics Championships.

archive: https://archive.ph/E6C6d#selection-2871.7-2891.225

  • PeleSpirit@lemmy.worldEnglish
    3·
    1 year ago

    I don’t think that’s a bad thing that they get equal pay, they’re blaming it on that when it sounds like the poster I was speaking to said it was corruption, risky schemes and decades of underfunding by stealing it for other things that was the problem.

    • merridew@feddit.ukEnglish
      7·
      1 year ago

      You can only starve a government body of funding – making it muddle along depleting its reserves and selling off assets – for so long until a final bill tips it over the edge, so I’d argue that if it wasn’t this bill it would be another bill.

      Other councils took risky approaches to replace money cut under Austerity:

      Woking said that against its available core funding of £16m in the 2023-24 financial year, the council faced a deficit of £1.2bn.

      Racked up to finance the building and acquisition of a vast empire of commercial assets, its investments included a complex of sky-high towers – standing as the tallest buildings outside a big city in England – including a four-star Hilton hotel, public plazas, parking facilities and shops.

      Many councils piled into property and other commercial enterprises to raise money to fill gaping holes in their budgets and to undertake regeneration projects after sharp cuts to central government funding introduced under the Conservatives’ austerity drive.

      https://www.theguardian.com/politics/2023/jun/07/woking-council-declares-bankruptcy-with-12bn-deficit