Jeremy Corbyn has criticised the government after Birmingham City Council effectively declared itself bankrupt, issuing a section 114 notice. The former Labour leader said the crisis was a direct result of 13 years of austerity under Conservative governments, warning that other councils could follow.
Birmingham's financial collapse stems from a combination of factors, including a £760m equal pay liability and an £87m budget shortfall this year. The council has already paid out £1.1bn to female workers in a long-running dispute over bonuses, but still faces claims accruing at up to £14m a month.
Experts warn that Birmingham is not alone. The Local Government Association estimates councils face a £3bn funding gap over the next two years. Woking, Croydon and Thurrock have also issued section 114 notices recently, and the GMB union is examining equal pay claims at 20 more authorities.
Council leaders John Cotton and Sharon Thompson blamed rising demand for adult social care, reduced business rates income and inflation. The government has been urged to provide multi-year funding settlements and address the systemic underfunding of local services.
