The extraordinary reasons why parts of Britain are going bust
Hilton hotel and the Chagos Islands have in common?
They all feature on a long and increasingly bizarre list of stories behind the financial crisis sweeping Britain’s local authorities.
While there’s been a steady dribble of so-called Section 114 notices from councils declaring effective bankruptcy in recent years, Birmingham City Council’s filing this week caused the most alarm.
For Europe’s largest local authority, a legal battle over equal pay is proving a huge drain on resources. Its leaders conceded on Tuesday it faces “unprecedented financial challenges” with all new spending, except on core services, stopped in a bid to right the ship.
Britain’s second city faces a bill as high as £760 million ($948 million) after a Supreme Court ruling from 2012 backed a group of largely female employees who missed out on bonuses that were given to staff in traditionally male-dominated roles at the council.
The council has already paid out £1.1 billion on the claims.
But Birmingham also blamed surging demand for social care, inflationary pressures and “dramatic reductions” in revenue from business taxes. Councils have borrowed over £133 billion combined, and the fallout is turning into yet another headache for Prime Minister Rishi Sunak ahead of expected elections next year.
Austerity
The situation is symptomatic of a broader crisis.
