Birmingham City Council effectively bankrupt
Birmingham City Council has issued a Section 114 notice, effectively declaring the local authority bankrupt.
In a statement, Cllr John Cotton, leader of the Labour-ran council and deputy leader Cllr Sharon Thompson said the notice was a “necessary step as we seek to get our city back on a sound financial footing”.
Now, no new expenditure is allowed for the largest authority in Europe, and only statutory services including safeguarding people will be permitted. Existing contracts and plans will however be honoured.
The council has faced mounting financial pressure, first after overspending by £80m on malfunctioning IT system Oracle, and it was then hit by a £760m equal pay liability and unofficially halted all non-essential spending. A total of £1.1bn had already been paid over the last decade in relation to the settlement of Equal Pay claims.
Today, the council said its equal pay bill is growing between £5m and £14m every month.
All staff were asked to consider resigning, as part of the struggling council’s plans to make savings on August 21.
Information on The Mutually Agreed Resignation Scheme (MARS) was sent to all 10,000 staff, with GMB Union claiming the council were ‘side stepping stolen wages’ as staff opting for the scheme could be required to sign away equal pay claims against the authority.
Michelle McCrossen, organiser at GMB union, Birmingham City Council’s largest staff union said: “Today’s announcement is a humiliating admission of failure on the part of Birmingham City Council’s officials and leadership.
“Not only are they responsible for creating this crisis through years of discriminating against their own staff, but even they no longer believe themselves capable of fixing it. For decades the Council has stolen wages from its low-paid women workers, running up a huge equal pay liability that has brought Birmingham to the brink.
“Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and of the essential services that they provide for the people of Birmingham.
“GMB will continue to fight for pay justice for our members, and to ensure those responsible for this crisis are held to account.”
Section 114 notices have been issued in recent years by Slough, Thurrock, Croydon and Northamptonshire.
