In worrying news, Birmingham City Council, the largest local authority in Europe, has declared itself effectively bankrupt.
A Section 114 notice has been issued preventing all but essential spending to protect core services.
The move has come after the authority announced it was facing a bill up to £760m for unequal pay claims that it couldn’t afford.
Titanic proportions
The bankruptcy has been called a “failure of Titanic proportions” by Birmingham opposition Liberal Democrat leader Roger Harmer.
“Every one of Birmingham’s citizens will feel the pain of this decision as we move into unchartered waters.
“Services will be cut to essential only meaning that many services that people rely on, services that are essential to those people, are going to be cut.”
Lewis Goodall: “Big news in local govt and for the country. Birmingham City Council, the largest local authority in Europe, issues a section 114 notice, effectively saying it is no longer solvent. Spending will now be limited to statutory services. Big decisions for Gove on how to handle.”
Birmingham Council financial timeline
According the BBC the timeline of issues have been building for a decade.
April 2010 – 5,000 mainly female Birmingham City Council staff win their case for equal pay.
October 2012 – The council loses an appeal over the case as the Supreme Court rejects the council’s argument the claims should have been made within six months of staff leaving jobs
2012-2023 – The council pays £1.1bn settling equal pay claims
May 2023 – A new leader of the council is chosen after a report criticises the “dysfunctional” climate at the West Midlands authority
20 June 2023 – Council report says £46.53m would be needed to fix problems with a new Birmingham City Council IT system
28 June 2023 – The council says it is in talks with the government after revealing it has to pay an additional £760m over equal pay claims
5 July 2023 – All non-essential spending halted
24 July 2023 – Rishi Sunak rules out a bailout for the council
21 August 2023 – Council launches a voluntary severance scheme asking all its more than 10,000 staff if they want to leave
3 September 2023 – Section 114 notice issued by council, declaring itself effectively bankrupt
