United Kingdom’s second-largest city effectively announced its insolvency, ceasing all nonessential expenditures following the receipt of equal pay claims amounting to as much as £760 million ($954 million).
Birmingham City Council, responsible for serving a population of over one million, issued a Section 114 notice on Tuesday, suspending all expenditures except for essential services.
The budget shortfall stemmed from challenges in meeting equal pay claims ranging from approximately £650 million to £760 million, stated the notice report.
Birmingham City Council’s declaration
In a statement, Birmingham City Council conveyed that it lacks the necessary resources to cover the costs associated with equal pay obligations and currently lacks alternative avenues to address this liability.
As a result of the notice, all new expenditures, except for safeguarding vulnerable individuals and essential statutory services, must come to an immediate halt.
According to the UK’s PA Media news agency, Sharon Thompson, the deputy leader of the council, informed on Tuesday that they are confronting persistent challenges, including historical concerns related to equal pay liabilities within the council.
Thompson also partially attributed some of these challenges to the UK’s governing Conservative Party, highlighting that Birmingham has experienced a reduction of £1 billion in funding over the years due to successive Conservative governments.
On the same, a representative speaking on behalf of UK Prime Minister Rishi Sunak conveyed that the responsibility for overseeing their budgets lies with locally elected councils. The spokesperson further mentioned that the government has been in ongoing communication with these councils, expressing apprehension about their governance practices, and seeking assurances from the council leader regarding the prudent utilization of taxpayers’ funds.
Elsewhere, the council’s leader, John Cotton, informed the BBC that they intend to introduce a new employment model within the council as a measure to address the equal pay claims bill.
