Birmingham City Council seeks Government help as financial woes worsen
The Council is effectively filing for bankruptcy.
Last updated 16th Feb 2024
Birmingham City Council has issued a Section 114 notice as a plea for legal intervention to the Government on finances.
Earlier this year the Council declared that it had up to £760m to pay on Equal Pay Claims.
As well just last week, the Council launched an employee-wide resignation scheme.
A spokesperson from Birmingham City Council has 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 £87m.
"In June the Council announced that 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.
"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.
"On that basis the Council’s Interim Director of Finance, Fiona Greenway, (s.151 – Chief Finance Officer) 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 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."
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% 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".
"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," the spokesman added.
Andy Street, the Mayor of the West Midlands, said: "Today's news from Birmingham City Council is deeply disturbing, and raises serious questions about the Council's leadership and the decisions they have taken over the past decade.
"When the news of the equal pay bill, which according to reports has now spiralled to more than £1.1 billion, first broke, we were all assured by the council that despite the seriousness of the situation they would produce a plan as to how they could settle the bill.
"I stood ready to support and help once that plan had been produced, irrespective of political colours. However, more than two months on, no plan has emerged.
"Instead, we are simply presented this morning with what is effectively a bankruptcy notice and an admission of defeat. The City of Birmingham deserves so much better, and truthfully I am incredibly concerned that citizens, and the services they rely on, have been let down in this way."