Photo credit: Birmingham Live
The largest local authority in the nation, Birmingham City Council, has formally declared bankruptcy after filing a section 114 notice, indicating that it lacks the funds to balance its budget. Council leaders cited a £760 million bill for equal pay claims, issues implementing a new IT system, and £1 billion in government budget cuts over the past ten years as the reasons for the notice, which forbids anything other than essential spending to maintain core services. The council claimed that “it does not have the resources” to cover its equal pay obligation and that there is an £87 million shortfall in its current budget.
John Cotton and Sharon Thompson, the council’s leader and deputy leader, said in a statement: “Like local authorities across the country, it is clear that Birmingham city council faces unprecedented financial challenges – from huge increases in adult social care demand and dramatic reductions in business rates income, to the impact of rampant inflation, it is clear that local government is facing a perfect storm.” Downing Street recognised that it would be “concerning” for the residents if the council declared itself to be experiencing an economic crisis.
The official spokeswoman for the prime minister declared: “The government, for its part, has stepped in to provide support, an additional £5.1bn to councils in 23-24, which is more than a 9% increase for Birmingham city council.”
The government has expressed worry about “their governance arrangements and has requested assurances from the leader of the council about the best use of taxpayers’ money,” he continued, adding that “clearly it’s for locally elected councils to manage their own budgets.”
He claimed government had “commissioned an independent governance review which will report in the coming weeks” and recognised Birmingham had a “particular issue around equal pay settlements”.
Prior to the forthcoming of the Commonwealth Games, which were held in Birmingham last summer, the council produced a financial plan last year dubbed a “bold budget” with the goal of “maximise the potential of a golden decade for the city.” Robert Alden, the head of the opposition Conservative party, accused the council of “lying to the people of Birmingham” during a meeting on Tuesday 5th September.
