There’s a bit too much schadenfreude from Tories over the effective bankruptcy of Birmingham Council. Its ‘Section 114 notice’ is an admission that the council (Europe’s largest) is unable to meet a £760 million equal pay lawsuit – so spending on all but essential services in Britain’s second city will stop. A Labour-run council has gone pop: a point that several Tory councillors have made. But like the school concrete fiasco, this might be the first sign of a deeper malaise – with more bankruptcies to come.
Birmingham is home to the largest – and perhaps worst-run – council in Europe. Part of the mess it has found itself in is liability for not paying women equal bonuses to those received by men between 2006 and 2012. The women sued and the Supreme Court in effect extended the time workers have to bring equal pay compensation claims from six months to six years. In 2012, the council warned that this meant a £757 million cost that could lead to bankruptcy. That sum has kept rising. The £1.1 billion it paid to settle historical claims was not enough.
The Tories are already making hay out of the collapse of a Labour-run council
Delay was adding £14 million to its bill every month: the GMB union goaded the council by publishing a clock showing the bill rise in real time. It is today declaring that it simply doesn’t have the money and won’t be able to find it either.
But councils all over the UK are under financial pressure. Since 2010, central government grants to local authorities have halved in real terms. But rising populations and ever-greater demands (especially on social care and housing) have stretched a few to breaking point.
Northamptonshire declared a Section 114 notice in 2018. Others have included Slough (December 2021 and again last November), Northumberland (May last year), Thurrock (last December) and Woking (in June). Croydon has done it three times in two years. Many more may follow. Kent and Hampshire, both Tory councils, have already warned that they’re on the brink of orders. ‘Whilst we fully recognise the difficult economic environment, we cannot sit by and let two great counties sleepwalk into a financial disaster,’ said the leaders of both councils in a letter to Rishi Sunak last year.
From councils to school buildings to sewage, the news all seems to fit a broader theme of national decline. So don’t expect many Tories to be gleeful at Birmingham’s woes.
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