Labour led Birmingham City Council declares they are ‘effectively bankrupt’

Birmingham City Council which is run by Labour has declared itself as it is “effectively bankrupt” amid equal pay claims.

Birmingham city council which is Europe’s largest local authority has said that they cannot balance their books because of multimillion-pound liabilities.

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 £87 million.

“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 added, “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.”

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.”