Birmingham city council has voted to approve spending control measures, as well as endorsing a “financial recovery plan” that is already under way.
The council debated the plan to tackle an estimated £760m equal pay liability before giving the go-ahead for the section 114 notice it issued earlier this month. The notice in effect declared the authority bankrupt and it is now expected to receive a revised emergency budget at another meeting late next month.
The vote came six days after the communities secretary, Michael Gove, announced commissioners are to be sent to run the council as part of a series of drastic emergency measures.
Gove said commissioners would be parachuted into the stricken authority to preside over decision-making, with the selling of council-owned assets, job cuts and a rise in council tax all anticipated.
Speaking during Monday’s meeting, the council leader, John Cotton, said: “This council is at a crossroads and the report before us outlines the key elements of the financial recovery plan that will address the severe challenges that we face.
“It has been an incredibly tough month for everyone associated with this council and I apologise to the people of Birmingham, our staff and our many partners across this city that we are faced with such stark choices. Tonight’s meeting must be the start of our recovery.”
Cotton added: “I am committed to seeing this through. I also welcome last week’s intervention announcement. Our collective task now is to transform the council. We must act decisively to close off this council’s longstanding equal pay liability once and for all.
“We have to do the right thing. We have to make sure our people are paid equally and fairly. We need to ensure that our cleaners, our teaching assistants, our refuse collectors are paid properly and fairly for the work that they do.”
The council, which serves more than 1 million people, has a budget shortfall of £87m for the current financial year, projected to rise to £165m in 2024-25.
It is facing a £760m bill for equal pay claims, on top of £1bn it has already paid out in equal pay compensation over the past decade, and major problems with a new IT system are expected to cost £100m to fix.
The Conservative councillor, Matt Bennett, who represents Edgbaston, said the impact of the crisis would be devastating and described the vote as being only a “plan to have a plan”.
Bennett said: “I find it implausible when they claim they are genuinely committed to equal pay for women – because they have been in power for 11 years. They’ve had 11 years to sort this out.”
