Europe’s biggest local authority has declared effective bankruptcy because of overspending, underfunding, a wildly expensive IT project and – by far the most significant factor – billions in equal pay compensation payments that it can’t afford. Birmingham City Council is responsible for public services across much of the UK’s industrialised West Midlands, and is a Labour stronghold. Those services, including public housing, transport and social care, will now have to be cut to the bone unless the Conservative government in Westminster rides to its rescue. Which is unlikely. “Clearly it’s for locally elected councils to manage their own budgets,” Rishi Sunak, the prime minister, said yesterday. In 2012 the UK’s Supreme Court ruled that bonus payments paid to male staff had not been paid to hundreds of their female colleagues, and should have been. The council has already paid out £1.1 billion in compensation but still owes £760 million, rising with interest by £14 million a month. It also faces a bill for up to £100 million for an new IT system originally costed at £19 million, and like other UK councils it depends on central government for most of its income. All told, local authorities in England and Wales expect to be £2 billion in the hole at the end of this year. Don’t be surprised if Birmingham hosts a drawn-out general election bunfight over Tory cheeseparing and Labour incompetence.
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