Birmingham city council declares itself in financial distress
Birmingham city council, the largest local authority in the country, has in effect declared itself bankrupt after issuing a section 114 notice signalling it cannot balance its budget without help.
In a statement published on Tuesday, the leader and deputy leader of the Labour-run council, John Cotton and Sharon Thompson, said the notice was “a necessary step as we seek to get our city back on a sound financial footing”.
They attributed the council’s financial crisis to “longstanding issues” including equal pay liability claims and complications from implementing a new IT system.
“We implemented rigorous spending controls in July, and we have made a request to the Local Government Association for additional strategic support,” the statement said.
A section 114 notice, issued in the past by councils including Croydon and Thurrock, means no new expenditure is permitted, with the exception of funding statutory services, and existing commitments and contracts.
Robert Alden, the leader of the Conservative opposition, said: “What Labour pledged was a golden decade ahead to voters in 2022 turns out to be based on budgets in 20/21 and 21/22 that did not balance and were unfunded.
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“Combined with Birmingham Labour’s refusal to deal with equal pay over the last decade this has created this mess where residents will now lose valuable services and investment”.