Birmingham City Council declares itself effectively bankrupt

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London – The local authority, Europe’s largest, has issued a Section 114 notice barring all but essential spending to protect key services.

In a joint statement, the leader and deputy leader of the Labor Authority said the move was a “necessary step as we look to put our city back on solid financial footing”.

Opposition Leader Robert Alden, a Conservative, said the council had “failed to demonstrate the speed and urgency needed to address the issue of equal pay”. Councilors John Cotton and Sharon Thompson, leader and deputy leader respectively, said the authority was also facing financial pressures due to problems with the implementation of its Oracle IT system.

The flagship system, intended to streamline council payments and human resources systems, was due to cost £19m, but after three years of delays it was revealed in May that it could cost up to £100m.

Cotton and Thompson said: Like local authorities across the country, it is clear that Birmingham City Council is facing unprecedented financial challenges, from the huge increase in demand for adult social care and the drastic reduction in business rates of income, to the impact of rampant inflation.
We implemented stringent spending controls in July and made a request to the Local Government Association for further strategic support. The issuance is a necessary step as we seek to get our city back on solid financial footing so we can build a stronger city for our residents. Despite the challenges we face, we will prioritize the critical services our residents rely on, in line with our values of supporting the most vulnerable.

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