<h5>Why did Birmingham City declare bankruptcy?</h5><p>Did you know that cities, states, or even countries can become bankrupt? Recently, the second-largest city in the United Kingdom, Birmingham, declared itself “essentially bankrupt.” The city council is now only spending money on essential services such as adult social care, waste collection, library services, maintaining roads, etc.</p><p>This situation may be the result of overspending. The city council of Birmingham owes a lot more money than they have. Let’s look at some of their major expenses.</p><p>In 2010, many female municipal employees won their case for equal pay. It was said that employees who worked as teaching assistants and catering staff had not been given any bonuses. This bonus is given to employees in male industries like street cleaning and garbage collection.</p><p>Since then, the council has paid around £1.1 billion in equal pay claims. The city is currently facing a bill of £760 million that keeps rising every month by a few million. They also face an issue with an IT system that was meant to cost £19 million. But after three years of delay in its installation, the cost is expected to rise by around £100 million.</p><p>The city council stopped all non-essential spending in July. However, it recently declared that it doesn’t have any more money to meet its financial obligations and will be unable to make any further expenditures. The city has also been criticised for hosting the <a target="_blank" rel="noopener noreferrer" href="https://www.newsahoot.com/articles/indias-excellent-performance-at-the-cwg-2022">Commonwealth Games</a> in 2022.</p><h5>Can a city file for bankruptcy in the UK?</h5><figure class="image"><img src="https://firebasestorage.googleapis.com/v0/b/newsahoot.appspot.com/o/birmingham-city-declares-bankruptcy%2FBirmingham_Council_House.jpg?alt=media&amp;token=3bdc40a1-abc3-4ba1-bddc-1ce373255611"><figcaption>Birmingham council house. Photo by Wikimedia Commons / Public Domain.</figcaption></figure><p>A city council cannot declare bankruptcy because of the mandatory services they must provide to the citizens. If a council's chief financial officer (CFO) thinks the organisation won't be able to meet its financial obligations, they are required to issue a "section 114 notice."</p><p>Many think issuing this notice is called "bankruptcy"; however, local authorities in the UK cannot declare bankruptcy. Birmingham issued this notice recently. This notice basically means that the city council lacks the resources to meet its financial obligations and cannot spend any more.</p><h5>What happens when a city in the UK declares a Section 114 notice?</h5><p>This notice means the council can’t make any new spending commitments. They must also meet within 21 days to decide what to do next. Previously, most councils facing this situation passed an updated budget that reduced spending.</p><p>The government can intervene in the administration of council services. Another way would be to reduce the services the council has to provide by law to the citizens. These are some things that can happen now.</p><h5>What happens next for Birmingham City?</h5><figure class="image"><img src="https://firebasestorage.googleapis.com/v0/b/newsahoot.appspot.com/o/birmingham-city-declares-bankruptcy%2FJeremy%20Hunt.jpg?alt=media&amp;token=335811a1-551c-4e2e-979c-894c2f07c056"><figcaption>Jeremy Hunt, the UK’s Chancellor of the Exchequer. Photo by Jeremy Hunt.</figcaption></figure><p>Jeremy Hunt, the UK’s Chancellor of the Exchequer, has said the government will do what is right for the people of Birmingham.</p><p>The council will host an emergency meeting later this month. More conversations with the government are expected to decide what to do next. The government has said that it is in contact with the city council and has asked them for additional information regarding the situation.</p>

Birmingham is the United Kingdom’s second-largest city.

Birmingham City Declares Bankruptcy

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Birmingham City Declares Bankruptcy

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