The UK government has announced that it will be sending in commissioners to oversee Birmingham City Council, which has been effectively declared bankrupt. The move comes after the council warned of a £760m bill to settle equal pay claims and a projected deficit of £87m in this year's budget.
Levelling Up secretary Michael Gove told the Commons that the government was prepared to extend additional financial support to the city, but warned of "tough decisions" ahead.
The commissioners will have the means to make decisions directly, if needed, and an inquiry will be launched to consider how the city got into its position.
The leader of Birmingham's administration, John Cotton, said the authority would now work with the government to get the council back on "a sound financial footing".
What caused the financial crisis at Birmingham City Council?
There are a number of factors that contributed to the financial crisis at Birmingham City Council. One of the most significant is the cost of equal pay claims. The council has been facing a backlog of equal pay claims from female employees for many years. In 2021, the council estimated that the total cost of these claims could be up to £760m.
What are the implications of the government intervention?
The government's intervention at Birmingham City Council is a significant development. It is the first time that the government has sent in commissioners to oversee a major local authority since 2019.
The intervention is likely to have a significant impact on the way that Birmingham City Council is run. The commissioners will have the power to make decisions directly, and they will be responsible for developing a plan to get the council back on a sound financial footing.
Photo Credit: iStock / UK Government