Birmingham City Council effectively declares bankruptcy after being hit by £760m bill

Published

2 years ago

September 5, 2023

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Birmingham City Council has effectively declared bankruptcy after being hit with a £760m bill to settle equal pay claims.

The council said it had issued a section 114 notice, confirming that all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately.

In a statement declaring itself in financial distress, the local authority said it will “tighten the spend controls already in place and put them in the hands of the section 151 officer to ensure there is complete grip”.

The Labour-run council is the largest local authority in Europe, comprising 101 councillors (65 Labour, 22 Conservative, 12 Liberal Democrat and two Green).

The statement read: “Birmingham City Council has issued a s.114 notice as part of the plans to meet the council’s financial liabilities relating to equal pay claims and an in-year financial gap within its budget which currently stands in the region of £87m.

“In June, the council announced it had a potential liability relating to equal pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month.

“The council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so.”

It added: “The council’s senior officers and members are committed to dealing with the financial situation and when more information is available it will be shared.”

Equal pay crisis

Sky’s Midlands correspondent Becky Johnson said the council has been in talks in recent months over the management of finances in Britain’s second city and the equal pay crisis.

It comes after a Supreme Court ruling back in 2012 found in favour of mostly female employees of Birmingham City Council – and that a bonus scheme that was handed out to staff in certain roles favoured those which were mainly taken up by men.

Johnson said: “They have been paying out these claims over the years, but the bill is now increasing by about £14m a month and currently stands at £760m – and is just not money the council can afford to spend.

“We know over the summer they stopped essential spending to try to meet this bill – they tried to do this without taking this measure.”

She said the implications of the section 114 notice are “serious”, adding there will be a huge reduction in investment from the council in the city while it tries to figure out how it is going to pay the bill.

Political fallout

“Now this has provoked a huge political row,” Johnson added. “The leader of the Conservative group is accusing the Labour-led council of failing to get a grip of the equal pay issue, and accused them of lying to the public that things were looking rosier than they were financially over recent years.”

Councillor Robert Alden, leader of the Conservative opposition, said: “Labour’s failure in Birmingham has become clear for all to see. What Labour pledged as 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.

“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.”

He added: “Birmingham Labour have no grip of their mess and no ability to fix it, hence why the final say on spending control has now been removed from the Labour political leadership.”

Downing Street said the move by the council will be “concerning” for residents.

Prime Minister Rishi Sunak’s official spokesman said: “Clearly local government is vital to our communities and we know they have been facing pressures. The government for its part has stepped in to provide support, an additional £5.1bn to councils in 23/24, which is more than a 9% increase for Birmingham City Council.

“Clearly it’s for locally elected councils to manage their own budgets, I know the department 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.”

He acknowledged Birmingham has a “particular issue around equal pay settlements” and said ministers have “commissioned an independent governance review which will report in the coming weeks”.

“It will be concerning for the people of Birmingham and it is important that the council provide reassurance and deliver on what has been requested by the department,” he added.

Other councils which have effectively declared bankruptcy

Hackney Council issued a section 114 notice in 2000, with Northamptonshire County Council following suit in 2018.

Croydon council issued its third section 114 notice in two years in November 2022, while Thurrock in Essex took the step in December last year after it got into difficulties over borrowing large sums to invest in solar energy.

Woking also issued a section 114 in June this year due to what it said was “an extremely serious financial shortfall owing to its historic investment strategy that has resulted in unaffordable borrowing, inadequate steps to repay that borrowing and high values of irrecoverable loans”.

UK

‘Major incident’ declared in Northern Ireland as wildfire breaks out amid higher-than-normal temperatures

Published

23 mins ago

April 6, 2025

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'Major incident' declared in Northern Ireland as wildfire breaks out amid higher-than-normal temperatures

A major incident has been declared in Northern Ireland after a wildfire broke out, the latest in a series of blazes seen across the UK over the past week amid soaring temperatures.

More than 100 firefighters and 14 fire appliances were at the scene of the “significant” wildfire on Sandbank Road, Hilltown, Northern Ireland Fire and Rescue Service said.

The fire had a front of approximately two miles “including a large area of forestry close to property”, the service said.

“Local residents are requested to avoid the area, a number of roads have been closed, to help support firefighting operations,” the fire service added.

“We ask that all members of the public remain particularly vigilant to the risk of fire at this time. We can reassure members of the public that normal service delivery is being maintained.”

Various fires erupted across England this week amid uncharacteristically warm and dry conditions for the time of year.

On Saturday, helicopters were deployed to tackle Scotland’s fourth wildfire this week, with police saying a blaze “which started in the Newton Stewart area has spread northwards and is expected to reach the Loch Doon area of East Ayrshire around 12am on Sunday”.

Police Scotland added: “As a precautionary measure members of the public are asked to avoid the Loch Doon area and anyone who may be camping in the area is advised to leave.”

Elsewhere in England, Devon and Cornwall Police said they were assisting the fire service with temporary road closures on the A30 in the Bolventor area as they tackle “a number of fires” on moorland.

In Dorset, Moors Valley Country Park was forced to close after multiple wildfires broke out there on Wednesday.

Separate incidents were then reported at Upton Heath in Poole on Wednesday, and nearby Canford Heath in the early hours of Thursday.

Friday was officially the warmest day of the year so far – with temperatures in the south of England reaching 23C (73.4F) – the highest since 21 September last year, according to the Met Office.

The weather conditions triggered a “severe” wildfire rating for parts of the UK on Tuesday.

UK

Labour MP Dan Norris arrested on suspicion of rape and child sex offences

Published

9 hours ago

April 5, 2025

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Labour MP Dan Norris arrested on suspicion of rape and child sex offences

Labour MP Dan Norris has been arrested on suspicion of rape and child sex offences.

A Labour Party spokesperson said: “Dan Norris MP was immediately suspended by the Labour Party upon being informed of his arrest.

“We cannot comment further while the police investigation is ongoing.”

Police said a man in his 60s had been arrested on Friday on suspicion of sexual offences against a girl, rape, child abduction and misconduct in a public office.

Sky News has contacted Mr Norris for comment.

Mr Norris, 65, defeated Jacob Rees-Mogg to win the new seat of North East Somerset and Hanham in last year’s general election.

He has also lost the party whip in the House of Commons and has stepped down from his role as chair of the League Against Cruel Sports.

Avon and Somerset Police said in a statement: “In December 2024, we received a referral from another police force relating to alleged non-recent child sex offences having been committed against a girl.

“Most of the offences are alleged to have occurred in the 2000s, but we’re also investigating an alleged offence of rape from the 2020s.

“An investigation, led by officers within Operation Bluestone, our dedicated rape and serious sexual assault investigation team, remains ongoing and at an early stage.

“The victim is being supported and given access to any specialist help or support she needs.

“A man, aged in his 60s, was arrested on Friday (April 4) on suspicion of sexual offences against a girl (under the Sexual Offences Act 1956), rape (under the Sexual Offences Act 2003), child abduction and misconduct in a public office. He’s been released on conditional bail for enquiries to continue.

“This is an active and sensitive investigation, so we’d respectfully ask people not to speculate on the circumstances so our enquiries can continue unhindered.”

Mr Norris first entered Parliament when Tony Blair came to power in 1997 and served as the Wansdyke MP until 2010.

He was an assistant whip under Mr Blair and served as a junior minister under Gordon Brown.

Mr Norris has also been West of England mayor since 2021 but is due to step down ahead of May’s local elections.

A spokesman for the League Against Cruel Sports, a UK-based animal welfare charity which campaigns to end sports such as fox hunting and game bird shooting, confirmed he had stepped down from his role.

“The charity cannot comment further while an investigation is ongoing,” a statement said.

UK

Jaguar Land Rover to ‘pause’ US shipments over Donald Trump tariffs

Published

17 hours ago

April 5, 2025

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Jaguar Land Rover to 'pause' US shipments over Donald Trump tariffs

Jaguar Land Rover (JLR) has said it will “pause” shipments to the US as the British car firm works to “address the new trading terms” of Donald Trump’s tariffs.

The US president has introduced a 25% levy on all foreign cars imported into the country, which came into force on Thursday.

JLR, one of the country’s biggest carmakers, exported about 38,000 cars to the US in the third quarter of 2024 – almost equal to the amount sold to the UK and the EU combined.

Follow live updates: Trump’s baseline 10% tariff kicks in

In a statement on Saturday, a spokesperson for the company behind the Jaguar, Land Rover and Range Rover brands said: “The USA is an important market for JLR’s luxury brands.

“As we work to address the new trading terms with our business partners, we are taking some short-term actions including a shipment pause in April, as we develop our mid- to longer-term plans.”

The company released a statement last week before Mr Trump announced a “baseline” 10% tariff on goods from around the world, which kicked in on Saturday morning, on what he called “liberation day”.

JLR reassured customers its business was “resilient” and “accustomed to changing market conditions”.

“Our priorities now are delivering for our clients around the world and addressing these new US trading terms,” the firm said.

Trading across the world has been hit by Mr Trump’s tariff announcement at the White House on Wednesday.

All but one stock on the FTSE 100 fell on Friday – with Rolls-Royce, banks and miners among those to suffer the sharpest losses.

Cars are the top product exported from the UK to the US, with exports worth £8.3bn in the year to the end of September 2024, according to data from the Office for National Statistics.

For UK carmakers, the US is the second largest export market behind the European Union.

Industry groups have previously warned the tariffs will force firms to rethink where they trade, while a report by thinktank the Institute for Public Policy Research said more than 25,000 car manufacturing jobs in the UK could be at risk.