Claims Birmingham City Council knew extent of £800m equal pay bills before setting budget

A section 114 notice which restricts all new spending was issued on Tuesday with the council unable to find the money for claims which estimates suggest have swelled to over £1 billion.

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Birmingham’s leadership knew up to £800m in equal pay bills were coming weeks before it set the budget for the year, it has been claimed.

That budget has since been put on hold, four months after it was announced, and the City Council is effectively bankrupt.

A section 114 notice which restricts all new spending was issued on Tuesday (September 5) with the council unable to find the money for claims which estimates suggest have swelled to over £1 billion. All non-essential spending had already been frozen when news of the huge bill became public in June.

At a lengthy finance scrutiny meeting yesterday (September 7) councillors grilled HR and finance officers about events in the years and months leading up to the crisis.

Interim HR chief Darren Hockaday informed the meeting that equal pay claim amounts had been emerging since late 2022 and officers had an “initial ballpark figure” in February of between £300-800 million.

He said it felt appropriate to come up with a working figure, adding: “It is easy to criticise officers who had anything to do with equal pay but I can assure you we were taking it very seriously.”

Mr Hockaday confirmed he sent an email notifying senior figures on Friday, February 3 at 7pm in preparation for a meeting on Monday 6 – three weeks before the council agreed its budget for 2023-24 on February 28. Cllr Paul Tilsley said the timing of that discovery meant the council had been told ‘lies’ over the budget setting.

He said: “The leader presented a budget to the city council in knowledge there was at least £300m claims against the city on equal pay. We have been told total lies and that is with a capital L, and I am appalled by this because it takes scrutiny to try and find out what actually happened.

“It is of paramount importance because it shows that the budget that we approved in February 2023 was an illegal budget.”

Asked by Coun Alex Aitken (Lab, Northfield) if the £300-800m estimation had been shared widely with senior people in Birmingham City Council before the budget, Mr Hockaday said: “What I am giving you is factual and correct.

“I don’t want to be a scapegoat for any of this, I have worked tirelessly on behalf of the council to fulfill my role and I just want to be clear about that because I care deeply about the financial position of the council and the sustainability of the organisation.

“If anything I take some pride that we produced a number that has turned out to be quite accurate.”

The meeting then took a firey turn when Mr Hockaday suggested he had never been asked these questions directly which committee chair Coun Jack Deakin (Lab, Allens Cross) firmly disagreed with.

He said: “Sorry Darren, that is absolutely not true.

“I have asked you this question and you have been asked many times previously by members of this council relating to when you found out the equal pay liability and when you told councillors.

“That is absolutely not true that no one has asked you these questions.

“No one here has tried to make you out to be some kind of scapegoat so I don’t know why that’s been mentioned.”

Birmingham arts and culture sector to get £9mn boost (Photo by Christopher Furlong/Getty Images)Birmingham arts and culture sector to get £9mn boost (Photo by Christopher Furlong/Getty Images)
Birmingham arts and culture sector to get £9mn boost (Photo by Christopher Furlong/Getty Images)

Council HR chief felt ‘quite intimidated’

Mr Hockaday went on to claim he had felt “quite intimidated” on a previous occasion at a Labour Group meeting after being asked about equal pay liabilities by Coun Aitken.

He said: “I felt it was highly inappropriate to be sharing some of that in the context of that meeting.

“If anyone’s got a recording of that meeting I’d love to see it back because I just felt like we were thrown to the wolves.”

Coun Deakin responded: “I think that it’s very strange when members of this council have been brought to distress over many, many months. I have raised the issue of equal pay liability for months and months and months, me, someone who is not a finance expert, and yet it has taken months and months to get to this point.”

Mr Hockaday explained Labour councillors who he had informed of the equal pay figure on February 6 were present.

And he said after the February 6 meeting, those councillors aware of the impending liability had not been prepared to share that information with other members of the council.

When asked by other members about the scale of liability, Mr Hockaday said that question made him uncomfortable as he felt it was for the senior members to share that information with their colleagues.

He told yesterday’s meeting: “Then I felt very uncomfortable and intimidated at being asked that question.

“Because those in the meeting could have volunteered that they were in that meeting, they heard that information and so I think that’s a question for your colleagues in the Labour Group in that meeting, not me.”