Due to equal pay claims totaling $954 million, Birmingham, the second-largest city in Britain, declared bankruptcy on Tuesday and stopped all non-essential spending. The Birmingham City Council put a stop to all spending on Tuesday by submitting a Section 114 notice, with the exception of necessary services.
A brief about Birmingham, the second-largest city in Britain, enters bankruptcy
The cost of handling equal pay claims, the municipal council claimed in the notification, has put it in a negative general fund situation at the moment. According to the statement, the claims would cause the council’s financial resources to be exceeded. This indicates that the amount of money the council had available to spend during that time period was more than the amount of money due during that time.
According to the notice, the potential cost of additional equal pay claims would range between £650 million and £760 million, or $816 million and $954 million, and the council does not have enough resources to handle this possible responsibility. “The Council will probably need to recognize this liability in the current or preceding fiscal years, which will have a negative impact on the General Fund balance. For the Council, this is an untenable financial situation.
The message stated that due to the situation, the council is prohibited from making any new agreements or financial commitments and that all non-essential spending will now cease with immediate effect. According to CNN, the Birmingham City Council serves more than 1 million people.
The council said in June of this year that it had to pay up to £760 million to resolve equal pay allegations and that it was in talks with the government about doing so. The BBC reported in June that the price was up to £14 million higher per month than its entire yearly service budget.
The council was ordered to pay claims submitted by hundreds of women for financial discrimination by the British Supreme Court in 2012. According to the BBC, the top court determined that hundreds of primarily female workers in positions including teaching assistants, cleaners, and caterers were denied bonuses that were paid to workers in occupations that have historically been dominated by men, like street cleaners and waste collectors.
