After shutting down all the nonessential spendings after being issued with equal pay claims up to £760 million which is equivalent to $954 million, Britain on Tuesday declared its second-biggest city Birmingham bankrupt, which came as a shock to people.
According to the sources, United Kingdom‘s Birmingham City Council, which provides services for more than one million people, filed a Section 114 notice on Tuesday, halting all spending except on essential services.
The council in its notification said that the dreadful financial situation came as it must fund an “equal pay liability” that has accrued to in the region of £650m to £760m, but it does not have the resources to do so.
“On that basis, the Council’s Interim Director of Finance, Fiona Greenway, has issued a report under section 114(3) of the Local Government Act, which confirms that the Council has insufficient resources to meet the equal pay expenditure and currently does not have any other means of meeting this liability.”
“The Council will tighten the spend controls already in place and put them in the hands of the Section 151 Officer to ensure there is complete grip. The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately,” it adds.
According to the notification issued on the official website, “In June the Council announced that it had a potential liability relating to Equal Pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month.”
It notification further reads, “The Council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so.”
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