Equal pay claims leave Birmingham City Council effectively bankrupt

Birmingham City Council has declared itself in financial distress over multimillion-pound liabilities to settle equal pay claims. In a statement on Tuesday, Europe’s largest local authority confirmed that it had issued the declaration that it cannot balance its books. It said all new council spending in the city, with the exception of protecting vulnerable people and statutory services, must stop immediately. A Birmingham City Council spokesperson said: ‘Birmingham City Council has issued a s.114 notice as part of the plans to meet the council’s financial liabilities relating to equal pay claims and an in-year financial gap within its budget which currently stands in the region of £87m. The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately ‘In June, the council announced it had a potential liability relating to equal pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month. ‘The council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so.’ The spokesperson said: ‘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. ‘The council’s senior officers and members are committed to dealing with the financial situation and when more information is available it will be shared.’ Reacting to the news, leader of the Conservative opposition Robert Alden said: ‘Labour’s failure in Birmingham has become clear for all to see, what Labour pledged was a golden decade ahead to voters in 2022 turns out to be based on budgets in 20/21 and 21/22 that did not balance and were unfunded. ‘Combined with Birmingham Labour’s refusal to deal with equal pay over the last decade this has created this mess where residents will now lose valuable services and investment.’ He added: ‘Birmingham Labour have no grip of their mess and no ability to fix it, hence why the final say on spending control has now been removed from the Labour political leadership.’