Tuesday, the second-largest city in Britain essentially declared bankruptcy by ceasing all non-essential spending after receiving equal pay claims for up to £760 million ($956 million).
Birmingham City Council, which serves more than a million people, submitted a Section 114 notice on Tuesday, suspending all expenditures save from those for essential services.
According to the notice report, the deficit resulted from difficulty paying equal pay claims totaling between £650 million (about $816 million) and £760 million (around $954 million).
For the fiscal year 2023–2024, the city now anticipates a deficit of £87 million ($109 million).
According to the UK’s PA Media news agency, the council confronts “longstanding issues, including the council’s historic equal pay liability concerns,” as deputy leader Sharon Thompson informed councilors on Tuesday.
The UK’s ruling Conservative Party was also partially to blame, according to Thompson, who said that Birmingham “had £1 billion of funding taken away by successive Conservative governments.”
“Local government is facing a perfect storm,” she declared. “Like councils across the country, it is clear that this council faces unprecedented financial challenges, from the impact of rampant inflation to the huge increases in demand for adult social care and dramatic reductions in business rates incomes.”
The city is still very much open for business, and we’re embracing people as they come along, she continued, despite the council’s enormous issues.
Tuesday, a representative for British Prime Minister Rishi Sunak said to reporters: “Clearly, it is the responsibility of locally elected councils to manage their own budgets.” According to the spokesperson, 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.”
John Cotton, the council’s leader, previously told the BBC that the authority would implement a new employment model to address the equal pay claims backlog.
The largest city in central England is one that celebrates diversity. A significant athletic event for Commonwealth nations, the Commonwealth Games, were held there last year, and the European Athletics Championships are slated to take place there in 2026.