'Birmingham council effectively declares bankruptcy'
Labour-run Birmingham City Council has declared itself effectively bankrupt.
The local authority confirmed that it had issued the declaration that it cannot balance its books due to multimillion-pound liabilities to settle equal pay claims.
It said all new spending, 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 ￡87million.
"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.
Birmingham City Council has declared itself effectively bankrupt (Image: PA)
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"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."
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Leader of the Conservative opposition Robert Alden said the council had "failed to show the proper speed and urgency needed to tackle equal pay".
He said: "Labour's failure in Birmingham has become clear for all to see. What Labour pledged as 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."
Meanwhile, Conservative Party chairman Greg Hands said: "My regular reminder that when Labour-run something, they run it badly. And once again, there is 'no money left' at Britain’s largest council."
Tory former Cabinet minister Simon Clarke added: "Birmingham joins a long list of Labour-run councils that have gone bust - Croydon, Nottingham, Slough.
"This year councils’ core spending power rose 9.2 percent. It is not good enough for councils to claim poverty - they need proper leadership and innovation."
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Downing Street acknowledged that Birmingham City Council having declared itself in financial distress will be "concerning" for residents.
The Prime Minister's official spokesman said: "Clearly local government is vital to our communities and we know they have been facing pressures.
"The Government for its part has stepped in to provide support, an additional ￡5.1 billion to councils in 23/24, which is more than a 9 percent increase for Birmingham City Council.
"Clearly it's for locally-elected councils to manage their own budgets, I know the department 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."
He acknowledged Birmingham has a "particular issue around equal pay settlements" and said ministers have "commissioned an independent governance review which will report in the coming weeks".
The spokesman added: "It will be concerning for the people of Birmingham and it is important that the council provide reassurance and deliver on what has been requested by the department."
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