Birmingham facing serious funding issue after identifying bill for equal pay dispute has reached £760m
Birmingham City Council has said it is engaging with external auditors and the Department for Levelling Up, Housing and Communities after a "refreshed" look at its finances revealed it still has to pay up to £760m to settle equal pay claims dating back to 2012.
The council said the situation is "one of the biggest challenges [it] has ever faced," noting that a panel of elected members, chaired by the Leader of the Council, with the support of an independent expert in local government finance, has been convened as part of an effort to enhance governance.
The Chief Executive and Interim Director of Finance have also begun work to develop a Budget Recovery Plan.
The council said it discovered the city council's current equal pay liability is in the region of £650m and £760m after implementing a new financial system.
According to the council, the liability continues to accrue at an estimated rate of between £5 million and £14 million a month.
"Given the huge sums involved the council cannot afford to pay this from existing resources, including reserves," a statement from the council noted yesterday (28 June).
"To put the scale of this financial challenge in context, the council's entire revenue budget for a year stands in the region of £750m, which is used to fund services across the city."
The local authority apologised for the "failure to get this situation under control" and warned residents that there "will be significantly fewer resources available in the future compared to previous years and we will need to reprioritise where we spend taxpayers' money".
The council said it has already paid out £1.1bn in relation to the settlement of equal pay claims since it lost its bid to strike out claims in the Supreme Court in 2012.
The Supreme Court heard claims from 174 former council employees that alleged that Birmingham was in breach of the 'equality clause' inserted into their contracts of employment by section 1(1) of the Equal Pay Act 1970, as substituted by section 8(1) of the Sex Discrimination Act 1975, by failing to provide certain benefits and other payments which were payable to workers of the opposite sex employed on work rated as equivalent.
Adam Carey
