Birmingham City Council is in conversation with the government due to being unable to pay an equal pay claims bill worth up to £760 million.
The council has already paid out a total of £1.1 billion to settle equal pay claims over the last decade following a Supreme Court ruling pay in 2012. However, new analysis conducted as a result of the implementation of its Oracle financial system revealed additional equal pay costs.
Its current equal pay liability is between £650 million and £760 million, which is continuing to accrue at an estimated rate of between £5 million and £14 million a month.
The council has stated that it cannot afford to pay this from its existing resources and reserves, as its entire revenue budget for a year stands at around £750 million.
It is engaging with external auditors and has held discussions with officials at the Department of Levelling-Up, Housing and Communities, which remain ongoing as it explores possible solutions. The council’s chief executive and interim director of finance have begun work to develop a budget recovery plan, while enhanced governance will be put in place to monitor the situation, chaired by the leader of the council, a panel of elected members and a local government finance independent expert.
A Birmingham City Council spokesperson said: “This is one of the biggest challenges this council has ever faced, and we apologise for the failure to get this situation under control. It means there will be significantly fewer resources available in the future compared to previous years and we will need to reprioritise where we spend taxpayers’ money. A values framework will be introduced to inform the difficult choices and the council’s focus will remain on tackling social injustice and inequality.”