Birmingham’s bankruptcy raises fears of a domino effect on other municipalities in the UK after years of budget cuts and a cost-of-living crisis by Conservative governments.
Birmingham City Council declared bankruptcy this Tuesday.
A year before the next general election, the bankruptcy announcement of England’s second-largest city, which manages public services for more than a million people, has sparked accusations of neglect of public services against administrators. The “Tories” have been following each other for 13 years.
The case comes after months of strikes in a completely overburdened hospital system and a school year dominated by a crisis over schools built with defective concrete, which led to the partial or complete closure of dozens of institutions before children could return to class.
Formally, Birmingham City Council, legally unable to balance its budget without government support, placed itself under the protection of “Section 114”. That’s what it means Only essential expenses are maintaineds.
Labor Mayor John Cotton explained that he had taken this “necessary step” to return to a healthy situation.
The move calls into question a number of exceptional expenditures, such as compliance with a court ruling for violating the Gender Equality Act, as well as the installation of a new IT system, but it decries the reduction in funding provided. Successive governments were conservative and the cost of living crisis.
Local authorities such as Birmingham are facing “unprecedented financial challenges” due to bursting social spending and inflation, the elected official has promised, citing an estimate by local authority association Sikoma that the next 26 could go bankrupt. for two years.
The government is dissociating itself from the crisis
“Locally elected councils are clearly managing their budgets,” said Rishi Sunak, the Premier’s spokesman, adding that Birmingham had benefited from a 9% increase in its funding this year.
The budgets of municipalities in the United Kingdom depend on the revenue from local taxes administered and applied to the institutions, but also on contributions from the state.
According to the Institute for Government think tank, this funding from London fell by 40% between 2009/2010, when the Conservatives came to power, and 2019/2020, before rising again with exceptional spending linked to Covid-19. 19 Pandemic.
Birmingham is the biggest, but it wasn’t the first city in the UK to declare bankruptcy. Croydon, a London borough, and Thurrock, east of the capital, declared bankruptcy a year ago.
“Birmingham is the most important council to fail so far, but if anything changes it won’t be the last,” said Jonathan Carr-West, director of local government information at the communities advisory association.
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