Birmingham, the second-largest city in Britain, announced its bankruptcy on Tuesday, shocking the city’s administration. According to the Guardian, the Labour-controlled administration of the second-largest city in the UK issued a 114 notice, stopping all but necessary spending and becoming the latest council to experience financial trouble.
When a council thinks its income won’t be enough to cover expenses, it issues a Section 114 notice. In the most recent years, Section 114 notifications have been issued in Thurrock, Croydon, Slough, and Northamptonshire.
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The equal pay lawsuit is one of the main factors contributing to the city’s bankruptcy. The City Council lacks the resources to pay the $955 million in equal pay claims it owes to female public employees who were previously paid less than male counterparts. The council disclosed in June that it had paid out 1.1 billion pounds to female employees but continued to have a current liability of 650–750 million pounds, which was accruing at a pace of 5–14 million pounds per month.
The city currently anticipates an 87 million pound deficit for the fiscal year 2023–2024.
“The Council does not currently have any other means of covering this liability and does not have enough resources to cover the equal pay expenditure.” According to the notice, all new spending must halt right away with the exception of protecting vulnerable individuals and providing statutory services, the Birmingham City Council stated in a statement.
“The Council does not currently have any other means of covering this liability and does not have enough resources to cover the equal pay expenditure.” According to the notice, all new spending must halt right away with the exception of protecting vulnerable individuals and providing statutory services, the Birmingham City Council stated in a statement.
The cost of the IT system was originally estimated to be 19 million pounds, but after three years of delays and issues following installation, it is now anticipated to cost 100 million pounds.
Inflation, an increase in the need for adult social services, and “dramatic reductions” in company tax revenue are also cited as contributing factors to the issue.
