The bankruptcy of Birmingham, the UK’s second city, raises fears of a domino effect

The lawsuit comes after months of strikes, and the beginning of the school year was dominated by a crisis over schools built with defective concrete, which led to the partial or complete closure of dozens of institutions just before children returned. Class.

Formally, Birmingham City Council, legally unable to balance its budget without government assistance, placed itself under the protection of “Section 114”. This means that only essential expenses are maintained.

Labor Mayor John Cotton explained that he had taken this “necessary step” to return to a healthy situation.

He questioned the penalty for violating the law on equality between men and women, as well as many exceptional expenses, such as the installation of a new computer system. But he decried the financial cuts and cost-of-living crisis delivered by successive Conservative governments.

Local authorities like Birmingham are facing “unprecedented financial challenges” as social spending explodes and inflation soars, an elected official has promised.

He cited an estimate by Sikoma, a federation of local authorities, that 26 of them could go bankrupt in the next two years.

“No More Money”

“It is clear that locally elected councils are managing their budgets,” replied a spokesman for Premier Rishi Sunak, adding that Birmingham had benefited from a 9% increase in funding this year.

The budgets of municipalities in the United Kingdom depend on revenue from local taxes applied to citizens and businesses, but also on contributions from the state.

According to the government think tank, funding from London fell by 40% between 2009/2010, when the Conservatives came to power, and 2019/2020, before rising again with exceptional spending related to the Covid-19 pandemic.

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During this period, the British saw their local taxes rise and the recent trend continued with rising prices, exacerbating the cost of living crisis, without stopping the visible deterioration of public services.

“The financial system no longer works. Local councils have done miracles for 13 years, but there is still no money,” says Stephen Houghton, president of the Sikoma Federation, ‘calling on the government to help.

Before Birmingham, the London borough of Croydon and Thurrock, east of the capital, declared bankruptcy a year ago.

“Central Government has long held communities hand and year in year out. Birmingham is the biggest council to ever go bankrupt, but unless something changes it won’t be the last,” added Jonathan Carr-West. , Director of Local Government Information, Community Advisory Association.

Municipalities are significantly responsible for the management of public schools, whose material problems have been highlighted in recent days by repeated revelations about brittle concrete used since the 1950s.

The Conservative government, widely trailing Labor in the polls, has been accused of ignoring the problem since the collapse of the school cap in 2018, despite the known dangers. It also seemed to shift the blame to municipalities and schools for reducing the problem. , Rishi Sunak presents the fact that 95% of companies are unaffected by this determination as reassuring news.

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