Birmingham City Council, the UK‘s second-largest city, declared insolvency due to mounting equal pay claims totaling up to £760 million ($956 million).
This financial crisis compelled the council to issue a Section 114 notice, effectively halting all nonessential expenditures while maintaining essential services. The deficit arises from the challenge of meeting equal pay claims ranging from £650 million to £760 million, reported CNN.
Sharon Thompson, the council’s deputy leader, cited longstanding issues and a reduction of £1 billion in funding by successive Conservative governments as contributing factors to the crisis. She noted that local government is grappling with unprecedented financial challenges, including rising demand for adult social care, reduced business rates income, and the impact of inflation.
Despite these challenges, Thompson emphasized that the city remains open for business. A spokesperson for UK Prime Minister Rishi Sunak emphasized the importance of locally elected councils managing their budgets while expressing concern about governance arrangements.
Birmingham, known for its cultural diversity, recently hosted the Commonwealth Games and is scheduled to host the 2026 European Athletics Championships.
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