On Tuesday, September 5, Britain’s second-largest metropolis Birmingham formally declared itself bankrupt. The resolution was reportedly taken because the Birmingham City Council, the biggest native authority in Europe, because it doesn’t come up with the money for to pay £760 million ($955 million) in equal pay claims it owes to feminine authorities staff who had been paid lower than their male counterparts up to now.
The different causes the council cited for its monetary woes are issues putting in a brand new IT system and £1 billion in authorities cuts.
The metropolis’s council issued a Section 114 discover on Tuesday to fulfill its monetary liabilities, it mentioned in a press release.
A Section 114 discover implies that a council is unable to fulfill its monetary liabilities and can’t decide to new spending. After the discover is issued, the native authorities shift give attention to sustaining solely important providers and halting these they deem ‘unessential.’ It usually results in a brand new finances with diminished expenditure.
The council mentioned that the dire monetary state of affairs arose because it should fund an “equal pay liability” nevertheless it doesn’t have the assets to take action. “On that basis, the Council’s Interim Director of Finance, Fiona Greenway, has issued a report under section 114(3) of the Local Government Act, which confirms that the Council has insufficient resources to meet the equal pay expenditure and currently does not have any other means of meeting this liability,” the council assertion learn.
“The Council will tighten the spend controls already in place and put them in the hands of the Section 151 Officer to ensure there is complete grip. The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately,” it added.
Sharon Thompson, deputy chief of the council mentioned it faces “longstanding issues, including the council’s historic equal pay liability concerns”. Thompson additionally blamed the ruling Conservative Party, saying Birmingham “had £1 billion of funding taken away by successive Conservative governments.”
Meanwhile, a spokesperson for UK Prime Minister Rishi Sunak mentioned the duty for efficient finances administration lies on elected councils.
Reasons for Birmingham City Council’s chapter
The equal pay declare was a significant factor contributing to the town’s chapter. The native authority mentioned it was required to pay up after a Supreme Court judgement in 2012 agreed with a gaggle of principally feminine staff who had missed out on incentives provided to employees in sometimes male-dominated professions on the council. It has already paid out greater than £1 billion on the equal-pay declare and has been hammered with expenditures from a brand new IT system.
The council additionally blamed “unprecedented financial challenges,” similar to inflation, elevated want for grownup social care, and “dramatic reductions” in earnings from enterprise taxes.
Birmingham is probably the most populous metropolis in central England. It hosted the Commonwealth Games final 12 months, a major athletic occasion for Commonwealth nations, and is ready to host the European Athletics Championships in 2026.
