UK’s second largest city declares bankruptcy

According to CNN, the Birmingham City Council, responsible for serving over one million individuals, issued a Section 114 notice on Tuesday, suspending all expenditures except for essential services.

London: Birmingham, Britain’s second largest city, has effectively declared itself bankrupt, shutting down all non-essential spending after being issued with equal pay claims totaling up to 760 million pounds ($956 million), the media reported.

The Birmingham City Council, which provides services for more than one million people, filed a Section 114 notice on Tuesday, halting all spending except on essential services, reports CNN.

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The deficit arose due to difficulties paying between 650 million pounds and 760 million pounds in equal pay claims, according to the notice report.

The city now expects to have a deficit of 87 million pounds for the 2023-24 financial year.

Sharon Thompson, deputy leader of the council, told councilors on Tuesday that it faces “longstanding issues, including the council’s historic equal pay liability concerns”, CNN reported.

Thompson also blamed in part the UK’s ruling Conservative Party, saying Birmingham “had 1 billion pounds of funding taken away by successive Conservative governments”.

In response, a spokesperson for Prime Minister Rishi Sunak said that “clearly it’s for locally elected councils to manage their own budgets”.

The government 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”, the spokesperson added.

The multicultural city of Birmingham is the largest in central England.

It hosted last year’s Commonwealth Games and is scheduled to hold the 2026 European Athletics Championships.