“ is one of the biggest challenges this council has ever faced… It means there will be significantly fewer resources available in the future compared to previous years and we will need to reprioritize where we spend taxpayers’ money,” it said in a statement in June. The council has already burnt through £1.1 billion ($1.4 billion) over the past decade to settle these claims and now expects to have a budget deficit of £87 million ($109 million) for the 2023-24 financial year. Hundreds more workers have since made similar claims. They argued that this breached the equality clauses of their employment contracts under the Equal Pay Act of 1970 - and the court agreed. The group, which included cleaners, cooks and care staff, alleged they were denied bonuses and other payments made to men who were doing work of equal value. The original case was brought by 174 former council employees, all except four of whom were women. The bill amounts to between £650 million ($810 million) and £760 million ($950 million), based on the council’s current estimates. Thompson blamed Birmingham’s financial troubles partly on an outstanding legal bill pertaining to the equal pay claims, which resulted from a Supreme Court ruling in 2012. That left it with no option but to issue a so-called section 114 notice, which means it will need to halt all spending except on essential services, such as schooling, housing, social care, waste collection and road maintenance.
The council said it would have to effectively declare bankruptcy because it had no more money to cover compensation awarded to former female staffers, which have been draining its coffers for years. “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, to the impact of rampant inflation.”
“Local government is facing a perfect storm,” Sharon Thompson, Birmingham City Council’s deputy leader, said in remarks broadcast Tuesday. Darren Staples/Bloomberg/Getty Imagesīritain's second-largest city effectively declares itself bankrupt amid $950 million equal pay claimsīut it is not alone in facing a serious funding shortfall, which is partly a symptom of deep cuts to central government spending over the past decade that have left Britain’s public services, including schools and hospitals, in a state of disrepair. Birmingham's council provides services for over a million people.
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