At the time,
it estimated it would need to plug a £130m-hole to balance the budget – which is
a legal requirement for authorities.
The council
also looking at selling off local libraries and a retail park.It
estimated it could raise about £100m by selling off 18 properties it owned.
Thurrock
and Slough councils have also previously declared bankruptcy. Both councils
raised council tax by 10%.
There are particular circumstances affecting Birmingham City Council to
do with a bill for equal pay claims and a problematic IT system, but it’s not
the only council facing tough financial times.
The government has made more money available to local councils to spend
for this year and next year, but councils say the cost of providing services
has shot up so much they’re still short.
Some are turning to their reserves - basically money they’ve set aside -
to help pay for day-to-day spending, and others are trying to find ways to cut
back.
That can affect the services that people rely on, like leisure centres
or support for people with disabilities.
Remember, councils were hit hard during the years of austerity - and so
now some are warning that they are really struggling to make ends meet.
The council has said Birmingham residents can still expect core services to be deliveredImage caption: The council has said Birmingham residents can still expect core services to be delivered
If you're just joining our live coverage, here's a quick refresher to get you up to speed.
Birmingham City Council, which is the largest local authority in Europe, has declared itself effectively bankrupt
A Section 114 notice has been issued preventing all but essential spending to protect core services
The move has come after the authority announced it was facing a bill up to £760m for unequal pay claims that it couldn't afford
The leaders of the Labour authority have said the measures are a "necessary step as we seek to get our city back on a sound financial footing"
The council's Conservative opposition leader has said the authority "failed to show the proper speed and urgency needed to tackle equal pay"
Stick with us as we bring you the latest updates and reaction.
'Definite concerns' over spending freeze
Birmingham City CouncilCopyright: Birmingham City Council
Birmingham can't now make any new spending commitments, the only
exceptions being funding for statutory services.
The council had already halted non-essential spending in July.
However it wasn't exactly clear exactly what
"non-essential" might include – parks, libraries, cultural projects or
even the city's hosting of European Athletics Championships in 2026?
At the time, deputy council leader Sharon Thompson said the
council would "do everything" to protect the services.
But in one example, Kynton Swingle, from the charity Fox Hollies
Community Association, said it could mean groups like theirs might have to stop
services.
Their organisation offers a range of support including free
meals for youngsters and acts as a warm hub for people struggling to heat their
home.
The financial freeze would mean a "really challenging
environment" and "there is definitely concern", Swingle said.
A humiliating admission of failure, says union
The GMB
Union - which has represented council workers in the equal pay claims that have
been linked to the council’s financial difficulties - has released a strongly
worded statement calling the announcement a "humiliating admission of
failure" on the part the council's officials and leadership.
"Not only
are they responsible for creating this crisis through years of discriminating
against their own staff, but even they no longer believe themselves capable of
fixing it," says GMB Organiser Michelle McCrossen.
She
accuses the council of stealing wages "from its low-paid women workers" and
running up a huge equal pay liability "that has brought Birmingham to the brink".
Quote Message: Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and of the essential services that they provide for the people of Birmingham."
Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and of the essential services that they provide for the people of Birmingham."
Financial problems huge - and getting bigger
Rob Mayor
Political reporter, BBC Radio WM
When Birmingham City Council first announced plans to cease
all non-essential spending in July, it sounded like it was issuing a section
114 notice, effectively bankruptcy in all but name.
Today all hope of avoiding that faded away.
The council is unable to balance its budget, its financial
problems are huge and, at the moment, getting bigger at rate of up to £14m a
month.
Last year’s triumphant Commonwealth Games were hailed as the
start of a "golden decade" for the city.
Instead, it is residents who now face a
future of cuts to services.
Council 'failed to show the proper urgency' - Tories
Conservative PartyCopyright: Conservative Party
The situation has been heavily criticised by the leader of the
Conservative opposition on the authority.
Councillor Robert Alden says the Labour-run council "failed
to show the proper speed and urgency needed to tackle equal pay".
The authority had pledged a "golden decade" at local
elections in 2022 but it's refusal to deal with equal pay over the past 10
years "created this mess", he says.
"Residents will now lose valuable services and
investment," says Alden.
£100m cost of botched IT system
BBCCopyright: BBC
Another issue adding to the council's financial woes is its Oracle IT system.
If a council's chief financial officer believes the authority can't meet its spending commitments they have to issue such a notice
Local authorities in the UK can't actually go bankrupt - but the issuing of the notice is often described as "being effectively bankrupt"
No new expenditure is allowed with the exception of funding statutory services, including safeguarding vulnerable people, but existing commitments and contracts will continue to be honoured
Most councils in such a position pass an amended budget, cutting spending
As we've been reporting, Birmingham City Council's financial pressures have been linked to a £760m equal pay bill it faces.
Earlier this year, the council said it was in talks with the government to settle the claims and would have fewer resources in the future.
The council also said it would have to reprioritise where it spends taxpayers' money.
The bill is equivalent to the council's entire annual spending on services and has been growing by up to £14m each month.
The Labour-run council - the largest local authority in Europe - has already paid out £1.1bn to settle claims after a ruling at the Supreme Court over pay in 2012.
The move came after the authority announced it was facing a bill up to £760m for unequal pay claims that it couldn't afford.
Because of the situation, the council issued the Section 114 notice. This confirmed there were insufficient resources to meet the equal pay expenditure and no other means of meeting that cost.
The pressures leading to the issuing of the Section 114 notice have been linked to a bill of up to £760m to settle equal pay claims.
In a joint statement, the leader and deputy leader of the Labour-controlled authority said the notice was a "necessary step as we seek to get our city back on a sound financial footing".
Opposition leader Robert Alden, Conservative, said the council had "failed to show the proper speed and urgency needed to tackle equal pay".
Live Reporting
Allen Cook
All times stated are UK
Get involved
Birmingham bailout previously ruled out by PM
Rob Mayor
Political reporter, BBC Radio WM
A bailout for Birmingham City Council has already been ruled out, earlier this summer, by the prime minister when he made a visit to the city.
In July, Rishi Sunak said it was "not the government's job to bail out the council for its financial mismanagement".
Labour MPs were calling on ministers to step in after the council revealed the scale of its financial struggles.
"The council just needs to do a better job of managing the figures properly and delivering good quality services to residents," Sunak said.
What happened when other councils went bust?
Croydon Council hiked council tax by 15% after declaring itself bankrupt for a second time in three years in November.
At the time, it estimated it would need to plug a £130m-hole to balance the budget – which is a legal requirement for authorities.
The council also looking at selling off local libraries and a retail park.It estimated it could raise about £100m by selling off 18 properties it owned.
Thurrock and Slough councils have also previously declared bankruptcy. Both councils raised council tax by 10%.
Thurrock Council also asked the government for a £636m bailout alongside the tax hike.
Some more money for councils - but costs rising
Alex Forsyth
Political correspondent
There are particular circumstances affecting Birmingham City Council to do with a bill for equal pay claims and a problematic IT system, but it’s not the only council facing tough financial times.
The government has made more money available to local councils to spend for this year and next year, but councils say the cost of providing services has shot up so much they’re still short.
Some are turning to their reserves - basically money they’ve set aside - to help pay for day-to-day spending, and others are trying to find ways to cut back.
That can affect the services that people rely on, like leisure centres or support for people with disabilities.
Remember, councils were hit hard during the years of austerity - and so now some are warning that they are really struggling to make ends meet.
What's been happening?
If you're just joining our live coverage, here's a quick refresher to get you up to speed.
Stick with us as we bring you the latest updates and reaction.
'Definite concerns' over spending freeze
Birmingham can't now make any new spending commitments, the only exceptions being funding for statutory services.
The council had already halted non-essential spending in July.
However it wasn't exactly clear exactly what "non-essential" might include – parks, libraries, cultural projects or even the city's hosting of European Athletics Championships in 2026?
At the time, deputy council leader Sharon Thompson said the council would "do everything" to protect the services.
But in one example, Kynton Swingle, from the charity Fox Hollies Community Association, said it could mean groups like theirs might have to stop services.
Their organisation offers a range of support including free meals for youngsters and acts as a warm hub for people struggling to heat their home.
The financial freeze would mean a "really challenging environment" and "there is definitely concern", Swingle said.
A humiliating admission of failure, says union
The GMB Union - which has represented council workers in the equal pay claims that have been linked to the council’s financial difficulties - has released a strongly worded statement calling the announcement a "humiliating admission of failure" on the part the council's officials and leadership.
"Not only are they responsible for creating this crisis through years of discriminating against their own staff, but even they no longer believe themselves capable of fixing it," says GMB Organiser Michelle McCrossen.
She accuses the council of stealing wages "from its low-paid women workers" and running up a huge equal pay liability "that has brought Birmingham to the brink".
Financial problems huge - and getting bigger
Rob Mayor
Political reporter, BBC Radio WM
When Birmingham City Council first announced plans to cease all non-essential spending in July, it sounded like it was issuing a section 114 notice, effectively bankruptcy in all but name.
Today all hope of avoiding that faded away.
The council is unable to balance its budget, its financial problems are huge and, at the moment, getting bigger at rate of up to £14m a month.
Last year’s triumphant Commonwealth Games were hailed as the start of a "golden decade" for the city.
Instead, it is residents who now face a future of cuts to services.
Council 'failed to show the proper urgency' - Tories
The situation has been heavily criticised by the leader of the Conservative opposition on the authority.
Councillor Robert Alden says the Labour-run council "failed to show the proper speed and urgency needed to tackle equal pay".
The authority had pledged a "golden decade" at local elections in 2022 but it's refusal to deal with equal pay over the past 10 years "created this mess", he says.
"Residents will now lose valuable services and investment," says Alden.
£100m cost of botched IT system
Another issue adding to the council's financial woes is its Oracle IT system.
Council leader John Cotton said earlier this year "the total cost may run to £100m" in order to fix problems.
The IT issues have been affecting payments, data management and background checks.
The Oracle system was brought in to overhaul internal functions including payments and HR processes.
According to a council report, the authority was meant to change such processes to fit Oracle's requirements.
Instead, another approach was taken and the problems emerged.
It is estimated the final cost to put things right is in the region of £100m, with the report requesting £46.53m this year to fund.
Read more on this story here.
What is a Section 114 notice?
Birmingham's £760m equal pay bill
As we've been reporting, Birmingham City Council's financial pressures have been linked to a £760m equal pay bill it faces.
Earlier this year, the council said it was in talks with the government to settle the claims and would have fewer resources in the future.
The council also said it would have to reprioritise where it spends taxpayers' money.
The bill is equivalent to the council's entire annual spending on services and has been growing by up to £14m each month.
The Labour-run council - the largest local authority in Europe - has already paid out £1.1bn to settle claims after a ruling at the Supreme Court over pay in 2012.
Read more on this story here.
Non-essential spending already halted
Birmingham City Council had already halted all non-essential spending in July as it sought to get its finances under control.
The move came after the authority announced it was facing a bill up to £760m for unequal pay claims that it couldn't afford.
Because of the situation, the council issued the Section 114 notice. This confirmed there were insufficient resources to meet the equal pay expenditure and no other means of meeting that cost.
Section 114 notice 'a necessary step'
Allen Cook
BBC News
The pressures leading to the issuing of the Section 114 notice have been linked to a bill of up to £760m to settle equal pay claims.
In a joint statement, the leader and deputy leader of the Labour-controlled authority said the notice was a "necessary step as we seek to get our city back on a sound financial footing".
Opposition leader Robert Alden, Conservative, said the council had "failed to show the proper speed and urgency needed to tackle equal pay".
Welcome to our coverage
Allen Cook
BBC News
Good morning, we are bringing you the latest around the news that Birmingham City Council has declared itself effectively bankrupt.
The local authority, the largest in Europe, has issued a Section 114 notice preventing all but essential spending to protect core services.