All new spending has stopped in Birmingham, except for programmes that are required by law, like protecting people who are weak.
Birmingham is the largest city outside of London in the UK, and its city government has stopped all spending that isn’t necessary because they might have to pay a $956 million bill for an equal pay settlement.
In a statement released on Tuesday, the Birmingham City Council said that it was in financial trouble and that it would “tighten the spending controls that are already in place” and hire an outside administrator to handle short-term financial planning.
“In June, the council said it could be liable for equal pay claims in the range of £650 million to £760 million ($816 million to $956 million), with an ongoing liability that is growing at a rate of £5 million to £14 million ($6.3 million to $17.5 million) per month,” the statement said.
It also said that the council “does not have the resources” to pay the amount owed but is “committed to dealing with the financial situation.” The group also said that all new spending should stop, with the exception of helping people who are weak or who need specific services.
The settlement bill comes from a Supreme Court decision in 2012 that sided with mostly female Birmingham City Council workers who had complained that bonus scheme payments mainly had gone to people in jobs that were mostly filled by men.
Sharon Thompson, the deputy head of the Labour-run council, said on Tuesday that the organisation is facing “long-standing problems, such as the council’s historic equal pay liability.” She also said that “successive Conservative governments took away £1 billion ($1.25 billion) in funding for the council.”
A spokesperson for UK Prime Minister Rishi Sunak said, “Clearly, it’s up to locally elected councils to manage their budgets.” Sunak’s office also said that Downing Street had “expressed concern about how they run the council and asked the leader of the council for assurances about how to spend taxpayers’ money in the best way.”
The budget cuts could hurt services that the council doesn’t have to keep up, like libraries, cultural projects, and keeping roads and parks in good shape. The lousy economy could also have an effect on the 2026 European Athletics Championships, which are set to take place at Alexander Stadium in Birmingham.
