Birmingham declares bankruptcy on aftermath of US$950 million in equal pay lawsuits

ON Tuesday, the second-largest city in Britain essentially declared bankruptcy by ceasing all non-essential spending after receiving equal pay claims worth up to £760 million (US$954 million).

Birmingham City Council recently submitted a Section 114 notice suspending all expenditures save from those for essential services.

According to CNN, the shortcoming resulted from difficulty paying equal pay claims totaling between £650 million (about US$816 million) and £760 million (around US$954 million).

As a result, for the year 2023-2024, the city now anticipates a deficit of £87 million (US$109 million).

According to the UK’s PA Media news agency, the council confronts “long standing issues, including the council’s historic equal pay liability concerns,“ as deputy leader Sharon Thompson informed councillors on Tuesday.

The UK’s ruling Conservative Party was also partially to blame, according to Thompson, who said that Birmingham “had £1 billion of funding taken away by successive Conservative governments.”

A perfect storm is threatening local governance, she declared. “Like councils across the country, it is clear that this council faces unprecedented financial challenges, from the impact of rampant inflation to the huge increases in adult social care demand and dramatic reductions in business rates incomes.”

Despite the council’s major issues, she continued, “the city is very much still open for business, and we’re welcoming people as they come along.”

Furthermore, a representative for UK Prime Minister Rishi Sunak told reporters, “Clearly, it is for locally elected councils to manage their own budgets.”

The spokesperson continued, saying that the government 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.”