Birmingham City Council will have to settle up to £760 million in equal pay claims, it has revealed.
The council recently introduced a new IT system that uncovered fresh details on a number of ongoing pay claims. It has already paid £1.1 billion to settle historical claims.
As of March 2023, Birmingham City Council has estimated its current equal pay liability at between £650 million and £760 million. An urgent spending freeze has been announced, according to reports.
Government officials and external auditors are now helping the organisation to work out how to allocate its budget and deal with the financial challenges caused by the settlements.
In a statement, the council said: “Given the huge sums involved, the council cannot afford to pay this from existing resources, including reserves.
“To put the scale of this financial challenge in context, the council’s entire revenue budget for a year stands in the region of £750m, which is used to fund services across the city.
“This is one of the biggest challenges this council has ever faced and we apologise for the failure to get this situation under control. It means there will be significantly fewer resources available in the future compared to previous years and we will need to reprioritise where we spend taxpayers’ money.”
Some of the claims date back to 2012, when a group of 170 women who used to work at the council won the right to proceed with equal pay claims against the council at the Supreme Court.
The women claimed that the council failed to provide them with the same benefits and payments as employees of the opposite sex who did equivalent work.
Many of these women worked in traditionally female roles such as teaching assistants, cleaners and catering staff.
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In 2021, the GMB union warned that there could be a slew of new claims after fresh information emerged about how roles were evaluated.
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