Birmingham City Council has become the latest authority to declare itself effectively bankrupt, with an £87m gap in its budget.
Europe’s largest local authority issued a section 114 notice yesterday, announcing that it would stop funding all but essential services.
Birmingham’s Labour leadership blamed the shortfall on the introduction of a £100m IT system, which had cost five times the original budget, and up to £760m in liabilities to compensate underpaid female employees.
In a joint statement, council leader John Cotton and deputy leader Sharon Thompson sought to blame funding cuts introduced by successive Conservative governments.
The total funding gap for local authorities in England and Wales is expected to grow to £2bn or more this financial year, according to the Local Government Association.
Andy Street, the Conservative mayor of the West Midlands, described the notice as “deeply disturbing” and said the council had failed to put forward a promised plan over how it would meet the equal pay bill.
