Birmingham City Council issues second bankruptcy warning amid ongoing financial crisis

Birmingham City Council building
The council has issued another Section 114 notice

Birmingham City Council has effectively declared itself bankrupt for the second time in two weeks after it failed to tackle equal pay claims.

The council leader John Cotton postponed a critical committee meeting on Thursday regarding the equal pay issue so that the council could hear from government-appointed commissioners.

On Tuesday, the Government announced that commissioners would be intervening with Birmingham City Council - essentially taking over the running of the local authority.

Commissioners won't be in place until Tuesday - so the council decided that continuing with discussions concerning the council's finances wouldn't be right.

Leader John Cotton stated that this was "simple common sense."

He added that it "would no longer be appropriate for the committee to make such a consequential decision without the commissioners having had the opportunity to examine the options and inform the committee of their view."

But in delaying that meeting until commissioners were present, the council has been forced to issue yet another Section 114 notice, warning that this delay will lead to even more financial problems.

On top of this - the council's chief legal officer has issued a Section 5 notice, which means they are flagging that the local authority's position could also raise legal issues.

Two weeks ago, the council issued its first Section 114 notice, essentially declaring bankruptcy for the first time.

Equal pay claims are part of the problem; the claims currently stand at £760 million, and if unpaid, this number will rise by £14 million per month.

Earlier this week the Government called in commissioners to take over the running of the council - they will start work on Tuesday 26 September.

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...