Michael Gove, the minister responsible for local authorities in the cabinet of conservative Prime Minister Rishi Sunak, justified the move by the local council, led by the opposition Labor Party, in failing to adequately fulfill its duties. Gove also announced an investigation into how the financial difficulties came about.
With 1.14 million inhabitants, Birmingham is the second largest city in the United Kingdom after London. More than 2.5 million people live in the Birmingham metropolitan area. According to the BBC, there is a hole of 87 million pounds (the equivalent of more than 100 million euros) in the municipal budget.
Almost a complete stop in spending since the beginning of September
The city declared itself de facto bankrupt at the beginning of September. All but essential spending was stopped with immediate effect. A statement at the time said the city was facing unprecedented financial challenges. These included significant additional expenses for adult care, a decline in income from trade tax and the high inflation rate.
However, the city administration is primarily faced with claims in the hundreds of millions from female employees who, following a court ruling on equal pay, claim that they have been paid less than their male colleagues for years. Next Monday, the local council is scheduled to discuss a rescue plan in an extraordinary meeting. There has already been speculation in the media that the city could be forced to sell buildings and land.
Many other communities are under financial pressure
Birmingham is far from the only city in the UK facing financial abyss. When the British government adopted an austerity program in 2010 in the wake of the global financial crisis, it also cut funding for local governments. Several smaller communities have already declared themselves insolvent in recent months, including Croydon, part of Greater London, and Woking, a town south of the capital.
qu/fw (dpa, rtr)