Britain’s second-biggest city effectively declared itself bankrupt on Tuesday, shutting down all nonessential spending after being issued with equal pay claims totaling up to £760 million ($956 million).
Birmingham City Council, which provides services for more than one million people, filed a Section 114 notice on Tuesday, halting all spending except on essential services.
The deficit arose due to difficulties paying between £650 million (around $816 million) and £760 million (around $954 million) in equal pay claims, the notice report says.
The city now expects to have a deficit of £87 million ($109 million) for the 2023-24 financial year.
Sharon Thompson, deputy leader of the council, told councilors on Tuesday it faces “longstanding issues, including the council’s historic equal pay liability concerns,” according to the United Kingdom’s PA Media news agency.
Thompson also blamed in part the UK’s ruling Conservative Party, saying Birmingham “had £1 billion of funding taken away by successive Conservative governments.”
“Local government is facing a perfect storm,” she said. “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,” she 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.”
The council’s leader John Cotton elsewhere told the BBC that a new jobs model would be brought into the council to tackle the equal pay claims bill.
The multicultural city is the largest in central England. It hosted last year’s Commonwealth Games, a major sporting event for Commonwealth countries, and is scheduled to hold the 2026 European Athletics Championships.
They mention it like 4 times in the article, but don’t explain what the hell “equal pay claims” even are.
This article goes into it in more detail
Women in female-dominated roles such as cleaners and caterers had complained that they were missing out on bonuses given to staff in male-dominated roles, such as refuse collectors.
Thanks for the info. We have better reporting on Lemmy than on CNN.
That’s because modern journalists are hardly anything more than stenographers most of the time.
99% of them just cut and paste information from elsewhere online. Capitalism has almost completely killed legitimate investigative journalism.
In 2008 I worked in News Production for a local television station. There are two examples that come to mind to show how shallowly they train journalists.
First, there was NASA, they were doing testing of new lunar rover they planned to send back to the moon in a city a little over an hour and a half away. I brought it to the attention of our news department who quickly chided me with “isn’t that outside our coverage area?” as if we didn’t have a website that broadcasted to the whole planet, technically. Well, we only got coverage because me and another guy from Production called the NASA press corps and got an invitation for our news station. We went to the news manager and they sent someone out, but we never got any video online. For the next week, still photos from the test were the top story on WIRED’s website for over a week. We could have had that traffic, but nope. “Outside our coverage area.”
Another time was when there was a scandal with an official running for office. It was the governors race, and weeks before the vote, a new case was dropping that was showing one of the two candidates for governor getting illegal funding for his campaign. I went to the site of the prosecutor, downloaded all the relevant data, and put it on journalists desks. I got asked by the Producer “Are you sure this is true? I didn’t see anything on AP Newswire.” Jesus tittyfucking Christ I guess these people had never heard of BREAKING A FUCKING STORY before. We ended up running it after about ten different State papers ran stories about it, because apparently it’s not news unless someone else reported on it first and you just do a copy-paste job from AP Newswire.
Not surprising considering most of us do not pay for news anymore.
That’s the hard truth. Real journalism costs money. Muckraking and yellow journalism comes pretty cheap.
It’s why misinformation is free, but quality journalism is behind paywalls.
Example: The good information we got was from The Guardian, which is funded by an endowment trust.
Women getting paid less than their male equivalents and successfully proving so in court
Just about to comment the same! I have no idea what the equal pay bill does, and a little insight on that would be super helpful.
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For non-UK readers: UK councils have limited revenue-raising powers compared to local government in other countries, and rely on 3 sources of income:
- Central government grants
- Council tax (on residential properties)
- Business rates (on commercial properties)
This amounts to c. 7% of the total UK tax base, versus c. 32% collected locally in Germany or 50% collected locally in Canada.
Central government grants were cut by 40% in real terms between 09/10 and 19/20 from £46.5bn to £28.0bn.
Council tax has gone up 30% over the same period, but it can’t go up more than 2% annually without passing a referendum (unlikely). Some councils in dire straits have recently been allowed to raise it 5%.
Local authorities have been underfunded for over a decade. Other UK councils which have already declared bankruptcy, either through running out of money, or through losing vast amounts of money in risky schemes attempting to replace missing central funding:
- Northamptonshire
- Hackney
- Slough
- Thurrock
- Croydon
- Woking
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Equal pay is something women have had to fight for.
In this case,
the court found hundreds of mostly female employees working in roles such as teaching assistants, cleaners and catering staff missed out on bonuses which were given to staff in traditionally male-dominated roles such as refuse collectors and street cleaners.
Women in the UK only gained the right to equal pay in 1970.
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You can only starve a government body of funding – making it muddle along depleting its reserves and selling off assets – for so long until a final bill tips it over the edge, so I’d argue that if it wasn’t this bill it would be another bill.
Other councils took risky approaches to replace money cut under Austerity:
Woking said that against its available core funding of £16m in the 2023-24 financial year, the council faced a deficit of £1.2bn.
Racked up to finance the building and acquisition of a vast empire of commercial assets, its investments included a complex of sky-high towers – standing as the tallest buildings outside a big city in England – including a four-star Hilton hotel, public plazas, parking facilities and shops.
Many councils piled into property and other commercial enterprises to raise money to fill gaping holes in their budgets and to undertake regeneration projects after sharp cuts to central government funding introduced under the Conservatives’ austerity drive.
Well, it sounds like if they hadn’t violated the law by deciding that women didn’t deserve equal pay, and hadn’t underpaid what seems to be a lotof women for a long period of time (seriously, almost a billion dollars in claims they have to pay out?!), then it seems like they wouldn’t be having this problem.
I’m not saying that underfunding government isn’t an overall issue, but it really seems like the immediate issue is that they decided to systemically underpay people for an extended period of time. And that’s on them.
If Birmingham city council was taking money from Russia it probably wouldn’t be bankrupt.
Did they make an equal pay bill that comes from tax dollars instead of the offending employers??
There was a Guardian article linked in the comments above that provided more context to the equal pay issue. The offending employer in this case was the council.
Public employees under the GMB union. The council is the employer.
