the country’s second city, Birmingham, declares bankruptcy

2023-09-05 21:30:12

Britain’s second city, Birmingham, declares bankruptcy. The municipal council can no longer meet its financial obligations and it denounces the government’s budget cuts.

Published on : 05/09/2023 – 22:56

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As of this Tuesday, Birmingham will stop funding non-essential services, but all contracts already signed will be honored, says our correspondent in London, Émeline Vin. Labor city council does not define what constitutes a service “ non-essential » for its million inhabitants, but parks, roads and cultural services risk being affected.

Elected officials must meet within three weeks to vote on a new amending budget in the largest local authority in Europe.

Mayor John Cotton denounces cuts in funding to local authorities following thirteen years of Conservative government. Inflation is also cited as responsible, which has exceeded 10% this year. With social spending exploding and inflation driving up costs, local authorities like Birmingham are facing “ unprecedented financial challenges », assured John Cotton, the mayor of the city.

But the main blow to the budget is the 800 million euros that the city still has to pay following a conviction for not having respected equal pay as well as the installation of a new IT system. The municipal opposition denounces poor financial management.

It affects the master

The situation in Birmingham raises fears of a domino effect. According to the Federation of British Local Authorities, 26 other towns might declare bankruptcy in the next two years. “ The financing system no longer works at all. Local councils have worked miracles for 13 years, but there is no more money », Alarmed the president of the Sigoma federation Stephen Houghton, calling on the government for help.

« It is clearly up to locally elected councils to manage their budget », Reacted a spokesperson for the Prime Minister Rishi Sunak, saying Birmingham had benefited from a 9% increase in funding this year. In the country, the municipal budget depends on revenue from local taxes applied to citizens and businesses, but also on a contribution from the State.

And according to the Institute for Government think tank, this funding from London fell by 40% in real terms between 2009/2010, a period marked by the Conservatives coming to power, and 2019/2020, before rising once more with spending. exceptional measures linked to the Covid-19 pandemic.

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