Britain’s second-largest city Birmingham's local authorities said that it is shifting focus on maintaining vital services as the council is effectively bankrupt due to an annual budgetary shortfall of millions of pounds. Birmingham City Council, the largest local authority in Europe comprising over 100 councillors, issued a Section 114 notice to say that all new expenditures with the exception of protecting vulnerable people and statutory services will be stopped immediately.
The council said that the dire financial situation arose as it must fund an “equal pay liability” but it does not have the resources to do so.
“On that basis, the Council’s Interim Director of Finance, Fiona Greenway, has issued a report under section 114(3) of the Local Government Act, which confirms that the Council has insufficient resources to meet the equal pay expenditure and currently does not have any other means of meeting this liability,” the council statement read.
“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,” it added.
The UK government's Department for Levelling Up, Housing and Communities (DLUHC) said that it had been "engaging regularly" with the council in recent months over the “pressures it faces”.
{{/usCountry}}The UK government's Department for Levelling Up, Housing and Communities (DLUHC) said that it had been "engaging regularly" with the council in recent months over the “pressures it faces”.
{{/usCountry}}"We have requested written assurances from the leader of the council that any decision regarding the council's issues over equal pay represents the best value for taxpayers' money," DLUHC said.
Andy Street, the mayor of the West Midlands region which covers Birmingham, said the news was "deeply disturbing" for residents.
"It is no secret that local authorities up and down the country have faced significant cuts over the past decade – even if the funding from government has been improving in recent years – and it has been a real challenge to keep services running to the standard that people expect," Andy Street said, adding, “However, the huge majority of councils of all political colours are managing to achieve this, with bankruptcy extremely rare.”