Birmingham City Council has declared itself effectively bankrupt after revealing it does not have the funds to settle up to £760 million in equal pay claims.
Today (5 September) the council – the largest local authority in Europe – issued a report under section 114 of the Local Government Act, which signalled its intention to stop all but essential spending.
The notice states that it is becoming more evident that settling the equal pay claims against the council is unaffordable. It is projecting a £87 million deficit for the 2023-24 financial year.
Birmingham City Council equal pay
Birmingham City Council rocked by £760m in equal pay claims
In June, the council said that a technology upgrade had revealed new details on a number of ongoing pay claims and ordered an urgent spending freeze. It estimated its equal pay liability as of March 2023 at between £650 million and £760 million.
Some of the claims date back to 2012, when a group of 170 women – including teaching assistants, cleaners and catering staff – won the right to proceed with equal pay claims against the council at the Supreme Court. They claimed that the council failed to provide them with the same benefits and payments as men doing equivalent work.
Birmingham City Council said today: “In June the council announced that 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… but it does not have the resources to do so.
“The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately.”
Michelle McCrossen, an organiser for the GMB union, said: “Today’s announcement is a humiliating admission of failure on the part of Birmingham City Council’s officials and leadership.
“Not only are they responsible for creating this crisis through years of discriminating against their own staff, but even they no longer believe themselves capable of fixing it.
“For decades the council has stolen wages from its low-paid women workers, running up a huge equal pay liability that has brought Birmingham to the brink.
“Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and of the essential services that they provide for the people of Birmingham.”
Birmingham City Council has not commented on whether there will be an impact on jobs or recruitment plans.
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