Councils in England in crisis as Birmingham declares itself bankrupt

Logo The GuardianThe Guardian
2023-09-05 18:37:59  • 6 mins

The crisis in local authorities was laid bare on Tuesday as Birmingham city council in effect declared itself bankrupt, with experts warning that others across the UK were now living hand to mouth.

The councils head of finance took the dramatic decision on Tuesday to issue a section 114 notice, indicating that it did not have the resources to balance its books.

Woking, Croydon and Thurrock are among the other councils to have made similar announcements recently after botched investment projects and deep funding cuts.

But the contagion spreading to the Europes largest local authority, which hosted last summers Commonwealth Games, is likely to intensify pressure on Rishi Sunaks government over the legacy of 13 years of austerity.

The notice means all but essential spending will be halted, in order to protect core services. It came after the Labour-led council estimated in July that equal pay claims brought by its female staff could cost it up to 760m.

Jonathan Carr-West, chief executive of the Local Government Information Unit (LGIU), said Birminghams decision raised questions about governance at the council, but was also a symptom of wider financial challenges facing local authorities.

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