UK economy: Britain’s second-largest city, Birmingham, declares financial distress: ‘there is nothing left’
- Birmingham City Council admitted that it cannot balance its books, blaming Conservative governments for years of underfunding
- But Tory members on the council blamed Labour mismanagement of public finances
Birmingham City Council in central England said it had issued a Section 114 Notice under the Local Government Finance Act 1988, which blocks spending on all but essential services.
Leaders of the Labour-controlled council called the move “a necessary step” to get spending back on a stronger footing.
They said “long-standing issues”, including the roll-out of a new computer system, had been compounded by cuts of £1 billion (US$1.25 billion) by successive Conservative governments since they came to power in 2010.
“Rampant inflation”, alongside increases in the cost of adult social care and reductions in business rates income had created “a perfect storm”, they added.
But Tory members on the council blamed Labour mismanagement of public finances.
In June, the council revealed that it has to pay up to £760 million to settle historic equal pay claims.
Birmingham is home to some 1.1 million people.