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Birmingham faces bankruptcy, cuts non-essential spending amidst equal pay claims

Written by  Jasleen Kaur -- September 06th 2023 01:44 PM
Birmingham faces bankruptcy, cuts non-essential spending amidst equal pay claims

Birmingham faces bankruptcy, cuts non-essential spending amidst equal pay claims

London, September 6: The second-largest city in Britain, Birmingham, has effectively declared bankruptcy by ceasing all non-essential spending after receiving equal pay claims for up to 760 million pounds (USD 956 million), CNN reported.

On Tuesday, Birmingham City Council, responsible for serving over a million residents, issued a Section 114 notice, which effectively halted all expenditures except those related to essential services.

As indicated in the notice report, the deficit has arisen due to challenges in meeting equal pay claims that range from £650 million (approximately USD 816 million) to £760 million (roughly USD 954 million). For the fiscal year 2023–2024, the city now anticipates a deficit of £87 million (USD 109 million).

According to the UK's PA Media news agency, Sharon Thompson, the Deputy Leader of the council, informed councillors on Tuesday that the city is grappling with "longstanding issues, including the council's historical concerns related to equal pay liabilities," as reported by CNN.

Thompson also put a part of the blame on the UK’s ruling Conservative Party, saying Birmingham “had 1 billion pounds of funding taken away by successive Conservative governments.”

She also said, “Local government is facing a perfect storm,” adding, “Like councils across the country, it is clear that this council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates incomes to the impact of rampant inflation.”

“Whilst the council is facing significant challenges, the city is very much still open for business and we’re welcoming people as they come along,” Thompson added.

A spokesperson for UK Prime Minister Rishi Sunak told reporters on Tuesday, “Clearly it’s for locally elected councils to manage their own budgets.” The spokesperson added 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,” CNN reported.

The multicultural city is the largest in central England. A significant athletic event for Commonwealth nations, the Commonwealth Games, was held here last year, and the European Athletics Championships are slated to take place here in 2026, CNN reported.



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