Unions ‘prepare for strikes’ after Birmingham City Council effectively declares bankruptcy

Unions have condemned government funding cuts and are preparing for strike action after Birmingham City Council announced it is effectively bankrupt.

They have also heavily criticised Prime Minister Rishi Sunak’s refusal to help the troubled city which issued a Section 114 notice – a legal measure which immediately stops all new spending – yesterday, Tuesday September 5.

The move is an admission of defeat after months of speculation over whether the authority could balance its books, with an £87 million shortfall for this year, plus a mammoth £1 billion estimate needed for equal pay claims.

The council also faces a £100m bill to fix a beleaguered IT system and all of this comes after £1b cuts to government money over the past decade.

In July, PM Rishi Sunak ruled out a bailout of Birmingham City Council, saying it was “not the government’s job” and “the council just needs to do a better job of managing the figures properly and delivering good quality services to residents”.

But Birmingham Trades Union Council (BTUC) has lambasted government funding cuts, citing the “brutal austerity programme” which has “failed the people on every metric” in authorities across the country.

BTUC statement

In a statement, members said: “Central government’s responsibility in this must be laid bare: worker’s Equal Pay claims are merely one among many factors in Birmingham City Council’s financial instability.

“BTUC is dismayed at the Prime Minister’s impulsive announcement that his government will do nothing to help more than one million people in Birmingham.”

BTUC also called for devolved powers to give people “meaningful control of public services”, consequences for companies that have profited from “disastrous PFI contracts”, effective taxation and “regulation of all sectors impacting people’s lives”.

The statement continued: “We know that the implications of Birmingham City Council’s financial situation will hurt marginalised communities the most: it is working class women and BAME workers that lost out from unequal pay, and it will continue to be working class women and BAME workers that suffer the most from the disruption of local services.”

GMB Union – the only union with live pay claims against the council – said the Section 114 is “a humiliating admission of failure” by council officials and leaders.

Union to prepare for strikes

A spokesperson told the Local Democracy Reporting Service (LDRS) GMB is preparing its members for strike action.

In a statement, Michelle McCrossen, GMB Organiser, said: “For decades the council has stolen wages from its low-paid women workers, running up a huge equal pay liability that has brought Birmingham to the brink.

“Due to the reckless incompetence of council bosses, thousands of city employees will be worrying for the future of their jobs and the essential services that they provide for the people of Birmingham. GMB will continue to fight for pay justice for our members, and to ensure those responsible for this crisis are held to account.”

Unite the union, which represents hundreds of workers at the local authority, said the grim situation was a direct consequence of the City Council’s chronic financial mismanagement as well as cuts.

Unite general secretary Sharon Graham said: “Birmingham City Council’s workers must not pay the price for the council’s or central government’s incompetence and financial mismanagement.

“Our members undertake vital frontline services that are essential for the communities they serve and they should not be impacted through no fault of their own.

“Unite always prioritises the jobs, pay and conditions of its members and will support those at Birmingham City Council to ensure they are not mistreated due to council and government failings.”

Unite regional officer Lee Wiggetts-Clinton said: “Unite is seeking urgent meetings with the council to ensure that Birmingham’s loyal workforce are not made the scapegoats for the financial crisis, which is not of their making.”