Birmingham City Council faces £250m equal pay payout

Birmingham City Council is expected to pay out more than £250m in equal pay claims according to ITV News.

The council was understood to have an equal pay liability above £867m, leading to the issue of a section 114 notice and into effective bankruptcy.

ITV claims that councillors will join an extraordinary meeting next Tuesday to discuss the deal with the trade unions. Sources expect the figure to be around £250m, but the council may shell out £400m if it pre-emptively pays female workers who have not yet lodged claims. 

The settlement, agreed between Labour leader John Cotton and trade unions, could result in the retraction of 6,000 legal cases. 

In August, a report by The Audit Reform Lab (ARL) said that cuts and asset sales made in the wake of the section 114 were implemented under a cloud of financial uncertainty.

Government intervention came as the local authority issued a Section 114 notice, effectively becoming bankrupt. But the drastic measures that followed were progressed without a robust assessment of the council’s dire financial situation says ARL.

The report commissioned by the GMB, Unison and Unite unions, highlights how the demise of the council was misdiagnosed and focused on an “overstated equal pay liability bill”, rather than ongoing service pressures, the failed implementation of the Oracle IT system, the impact of austerity and the Covid-19 pandemic. 

GMB and Birmingham City Council declined to comment.