On Tuesday (September 5th), the second largest city in the UK actually declared bankruptcy, and after receiving a total of £ 760 million ($956 million) in equal pay claims, the city closed all unnecessary expenses.

The Birmingham City Council, which provides services to over 1 million people, submitted a 114 th notice on Tuesday, suspending all expenditures except for basic services.

The notice report states that the deficit was caused by difficulties in paying equal pay claims, ranging from £ 650 million (approximately $816 million) to £ 760 million (approximately $954 million).

The city is currently expected to run a deficit of £ 87 million ($109 million) in the 2023-24 fiscal year.

According to PA media reports in the UK, Sharon Thompson, the vice chairman of the committee, told lawmakers on Tuesday that the committee faces "long-standing issues, including its historic responsibility for equal pay for equal work".

Thompson also partially criticized the ruling Conservative Party in the UK, stating that Birmingham was "taken £ 1 billion in funding by previous Conservative governments".

The local government is facing a perfect storm, "she said. Just like local councils across the country, it is evident that this local council is facing unprecedented financial challenges, from a significant increase in adult social care demand and a significant reduction in corporate tax revenue to the impact of rampant inflation

She added, "Although the municipal council faces significant challenges, this city is still open to commerce, and we welcome people to come

On Tuesday, a spokesperson for British Prime Minister Sunac told reporters: "It is clear that the local elected parliament should manage its own budget." The spokesperson added that the government has been "in regular contact with them for this purpose, expressing concerns about their governance arrangements, and requesting committee leaders to ensure that taxpayers' money is best utilized

Committee leader John Cotton told the BBC that the committee will introduce a new work model to address the equal pay requirement bill.

This multicultural city is the largest in central England. It hosted last year's Commonwealth Games and plans to host the 2026 European Athletics Championships.

Where will we go next?

After the Birmingham City Council announced that they had actually gone bankrupt, residents of the city were warned that "nothing is certain" about which services may be cut.

The Labour managed parliament may have to close libraries, reduce the frequency of garbage collection, or increase parliamentary taxes after issuing the 114th notice - which means it cannot meet its financial responsibilities.

The committee attributed its financial difficulties to £ 760 million in equal pay claims, expenses for the new IT system, and funding cuts from previous Conservative governments over the years. Its annual budget gap is £ 87 million.

A spokesperson for the Birmingham City Council said: 'The Birmingham City Council has issued Notice 114 as part of the plan to meet the financial responsibilities of the council related to equal pay for equal work requirements, as well as the current annual financial gap of £ 87 million in its budget.'

In June of this year, the committee announced that potential liabilities related to claims for equal pay for equal work ranged from £ 650 million to £ 760 million, with ongoing liabilities increasing at a monthly rate of £ 5 million to £ 14 million. The committee is still in a position to provide funding for the accumulated equal pay responsibility (between £ 650 million and £ 760 million) to date, but it does not have sufficient resources to do so

According to the notification under Article 114, the Birmingham City Council, the largest authority in the UK and Europe, will cease all new expenditures, except for the protection of vulnerable groups and statutory services.

Jonathan Werran, CEO of independent think tank Localis, stated that many of the services provided to residents will now be criticized. It's like sitting on a hot air balloon and then throwing something out of the basket and keeping it in the air... everything's uncertain, "he said.

Services that may face budget cuts include street cleaning, parks and maintenance, leisure, children's services that are not part of social care, libraries, and even the frequency of garbage collection.

Geoff Winterbottom, head of research and policy at Sigoma, representing 47 city authorities in England, stated that the municipal council could also raise municipal taxes to address fiscal issues.

Currently, local councils can only increase local taxes by up to 5% without a referendum. However, Winterbottom stated that given its dangerous financial situation, the committee could request the government to allow it to increase the tax rate to over 5% without the need for local opinion polls.

Birmingham City Council Vice Chairman Thompson told lawmakers at a meeting on Tuesday that this notice is "a necessary step we seek to restore a healthy financial foundation to our city.

She said, "What I want to emphasize is that despite the enormous challenges we face, we will prioritize the core services that our residents rely on, which is in line with our values of supporting the most vulnerable groups in this city

In June of this year, the committee revealed that after losing the Supreme Court, it had paid nearly £ 1.1 billion in equal pay claims over the past 10 years. In this case, female employees stated that they did not receive the same bonuses as male employees in the same salary level.

The committee's current liabilities related to claims range from £ 650 million to £ 760 million, increasing at a monthly rate of £ 5 million to £ 14 million. The committee also stated that "previous Conservative governments have taken £ 1 billion in funding from Birmingham

Robert Alden, the leader of the Conservative opposition party, said that the problem in Birmingham is being replicated nationwide, which "embarrasses this great city" and is a "cloud cuckoo land".

In a statement, he said, "The failure of the Labour Party in Birmingham is already evident. The Labour Party's promise to voters for the 2022 Golden Decade is based on budgets for the years 20/21 and 21/22, which are not balanced and have no funds

In addition, the Birmingham Labour Party has refused to address the issue of equal pay for equal work over the past decade, which has caused this chaos and residents will now lose valuable services and investments

The Hackney Council issued Notice 114 in 2000, followed closely by the Northampton County Council in 2018.

The Croydon City Council issued its third Article 114 notice in November 2021, which was taken by Cerroc in Essex County after facing difficulties in December last year due to borrowing large amounts of funds to invest in solar energy.

In June of this year, Wokin also released Article 114, as the company stated that "due to its historical investment strategy, it has caused extremely serious financial shortages, resulting in unaffordable loans, insufficient measures to repay loans, and high loan values that cannot be recovered.

Shaun Davies, Chairman of the Local Government Association (LGA), said: "The local councils in England are facing a funding gap of nearly £ 3 billion in the next two years, and this is only to maintain service stability." The ability of local councils to alleviate these severe pressures is constantly hindered by the uncertainty brought about by one-year funding solutions, one-time funding pools, and repeated delays in funding reforms.

The government needs to come up with a long-term plan to provide sufficient funding for local services. This must include providing greater financial certainty to local councils through multi-year solutions, as well as clearer financial reforms, so that they can effectively plan