Birmingham, the second-largest city in Britain, has issued a Section 114 notice, meaning it cannot meet its financial liabilities as the city council has officially declared itself effectively bankrupt. The Labour-run council has shifted its focus to maintaining vital services as the council faces an annual budgetary shortfall of millions of pounds. The notice states that all new expenditures, except for protecting vulnerable people and statutory services, will stop immediately.

The council has to shut libraries, lessen the frequency of bin collections, or raise the council tax. The city residents have been alarmed by the situation.

The council stated that the terrible financial position emerged because it is required to meet an “equal pay liability” that has accrued to date in the area of GBP 650 million to GBP 760 million, but it lacks the wherewithal to do so.

Councils can now raise local taxes by no more than 5% without a vote. However, because of the council’s precarious financial state, Mr. Winterbottom suggested that the council petition the government to enable it to raise it over the 5% limit without holding a local referendum.

“Like local authorities across the country, it is clear that Birmingham City Council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates income to the impact of rampant inflation,” said council leader John Cotton and his deputy, Sharon Thompson, in a joint statement. Regardless of the issues we confront, we will prioritize fundamental services on which our inhabitants rely, in keeping with our ideals of assisting the most vulnerable.

-Anushka Upadhyay