Birmingham City Council ‘effectively bankrupt’

Birmingham City Council has declared itself effectively bankrupt.

The local authority has issued a Section 114 notice preventing all but essential spending to protect core services. 

The pressures have been lined to a £760m bill to settle equal pay claims. 

In a joint statement, the leader and deputy leader John Cotton and Sharon Thompson said the notice was a “necessary step as we seek to get our city back on a sound financial footing”. They also said the authority was facing financial pressures due to issues with the implementation of its Oracle IT system.

The notice – which has been issued in the past for other councils – means a local authority judges itself to be in financial distress and can no longer balance its budget. 

“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,” they said, adding local government faced “a perfect storm”.