Labour Party-Run Birmingham Council Declares Effective Bankruptcy

In the latest example of a Labour Party-run area running out of money, Birmingham City Council issued a spending freeze Section 114 notice, meaning that the local government of England’s second-largest city will only be able to dole out funds to maintain core services.

The decision was made after the council failed to settle a bill that it owed to settle equal pay claims following a lawsuit from 174 female council workers, who successfully sued the local government for failing to provide bonuses to traditionally female jobs such as cooks and cleaners while offering bonuses to jobs typically staffed by men such as gravediggers, trash collectors, and street cleaners.

While the council has paid out nearly £1.1 billion in equal pay claims since the 2012 decision, it still has £760 million in outstanding debts. The council also pointed to failures of the Oracle IT system that the government hoped would save costs on data management and payment processing but has instead faced years of delays and run a bill of upwards of £100 million in costs — five times the original budget for the system.

While the council has paid out nearly £1.1 billion in equal pay claims since the 2012 decision, it still has £760 million in outstanding debts. The council also pointed to failures of the Oracle IT system that the government hoped would save costs on data management and payment processing but has instead faced years of delays and run a bill of upwards of £100 million in costs — five times the original budget for the system.

In a statement, the council said per The Telegraph: “Today’s issuing of a Section 114 Notice is a necessary step as we seek to get our city back on a sound financial footing so that we can build a stronger city for our residents.”

Labour Party councillors John Cotton and Sharon Thompson added: “Like local authorities across the country, it is clear that Birmingham City Council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates income, to the impact of rampant inflation.”

It is not the first time that a Labour Party-run local government has run out of money in recent years, with the Croydon Council in London declaring effective bankruptcy last year for the third time over a two-year period after wracking up a “toxic debt burden” of over a billion pounds.