The bankruptcy that led to brutal local cuts was blamed on an equal pay claim. The truth is more complex – and damning
James Brackley is an accounting academic at The Audit Reform Lab
Birmingham city council declared itself effectively bankrupt in September last year, but only now are the facts about what really happened beginning to emerge. A series of monumental problems and errors, including the botched implementation of a new IT system, a likely overstated equal pay liability, and a disastrous financial package imposed on the council by the last Conservative government, have paved the way for the largest programme of cuts and asset sales yet for any local authority.
This was far from inevitable. When council officers issued the section 114 bankruptcy notice last September, it identified a looming set of equal pay claims as the primary cause of the council’s financial distress. Two weeks later Michael Gove, then secretary of state for levelling up, housing and communities, told parliament that it was the “independent auditors’ assessment” that this equal pay liability was probably at least £760m (and could be “much higher”), and that the council did not have enough money to cover this.
James Brackley is an accounting academic at The Audit Reform Lab
