Birmingham City Council Declares Itself "Effectively Bankrupt" and Halts Non-Essential Spending

Financial Crisis

Town hall bosses at Birmingham City Council have taken the drastic step of declaring the local authority "effectively bankrupt". The council has issued a Section 114 notice, which blocks all spending except on essential services. This move comes as the council grapples with significant financial pressures, including £760m spent on equal pay settlements and a £46.5m bill to fix the council's IT system.

Reaction and Criticism

Chairman of the Conservative Party, Greg Hands, has criticized the council for its financial mismanagement. He stated, "My regular reminder that when Labour run something, they run it badly. And once again, there is 'no money left' at Britain's largest Council."

Unprecedented Challenges

Council bosses, John Cotton and Sharon Thompson, acknowledged that Birmingham City Council is facing unprecedented financial challenges. They cited a surge in demand for adult social care, a steep decline in business rates income, and the impact of inflation. The council implemented strict spending controls earlier this year and has requested additional strategic support from the Local Government Association.

In spite of these challenges, Cotton and Thompson have emphasized that core services relied upon by residents will be prioritized, in line with the council's commitment to supporting the most vulnerable.