The country’s second city, Birmingham, declares bankruptcy

The country’s second city, Birmingham, declares bankruptcy

From Tuesday, Birmingham will stop funding non-essential services, but all contracts already signed will be honoured, says our correspondent in London. Emmeline Finn. The Labor City Council does not define what constitutes a service.” not necessary “For its population of one million, but parks, roads and cultural services are vulnerable.

Elected officials must meet within three weeks to vote on a new revised budget in Europe’s largest local authority.

Mayor John Cotton has denounced funding cuts to local authorities After thirteen years of Conservative government. Inflation is also cited as responsible, which has exceeded 10% this year. With rising social spending and inflation driving up costs, local authorities like Birmingham face “ Unprecedented financial challenges », confirmed John Cotton, the city’s mayor.

But the main hit to the budget is the €800 million the city still has to pay after being found guilty of not respecting equal pay as well as installing a new IT system. The municipal opposition denounces financial mismanagement.

Domino effect

The situation in Birmingham raises fears of a domino effect. According to the Association of British Local Authorities, 26 more cities could declare bankruptcy within the next two years. ” The financing system no longer works at all. The local councils have worked miracles for 13 years, but there is no more money », Segoma union president Stephen Houghton was alarmed, calling on the government to help.

It is clear that it is up to locally elected councils to manage their budget », responded the Prime Minister’s spokesman Rishi SunakSaying that Birmingham has benefited from a 9% increase in funding this year. In the country, the municipal budget depends on local tax revenues applied to citizens and companies, but also on the state’s contribution.

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According to the Institute for Government Research, this funding from London fell by 40% in real terms between 2009/10, the period marked by the Conservatives’ rise to power, and 2019/2020, before rising again with spending. for the Covid-19 pandemic.

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