The city of Birmingham, the second of United Kingdom, was declared in bankruptcy this Tuesday and warned that other municipalities could end up the same, blaming the state for underfinancing and the economic situation.
The municipal council that manages the public services of more than a million people, an unparalleled number in the country because London is divided into districts, took refuge in “section 114”.
This means that only essential expenses are kept and is tantamount to bankruptcy for a business. The council is no longer able to balance its budget, as required by law, without government help.
Mayor, John Cotton (Labour), indicated in a statement released by the press that it had taken this “necessary measure” to clean up the situation.
Birmingham: the city of the Peaky Blinders and the Maxi López club
The city of Birmingham is recognized for being the setting for the Peaky Blinders series, which tells the story of a criminal organization that operated there in real life at the beginning of the last century.
There is also a curious link with Argentina. It is that the former striker Maxi López bought the city club in 2022.
maxi lopez owner english club.jpg
why did it go bankrupt Birmingham?
He alleged the existence of several exceptional expenses, such as a conviction for infraction of labor laws, a decrease in the financing granted by successive Conservative governments for the last thirteen years and the cost of living crisis.
With some increasingly high social spending and rising inflationCouncils such as Birmingham are facing “unprecedented financial challenges,” he said.
He cited an estimate by the federation of local authorities Sigoma, which calculates that 26 of those municipalities could declare bankruptcy in the next two years.
“Clearly, it is up to the locally elected councils to manage their budget,” reacted a spokesman for the British prime minister.
The budget of UK councils depends on revenue from local taxes levied on citizens and businesses, but also on a contribution from the State that has been reduced considerably, mainly due to the austerity policies of the 2010s.
According to the Institute for Government think tank, state funding fell by 40% in real terms between 2009/2010, when the conservatives came to power, and 2019/2020. Thereafter it rebounded, due to exceptional items related to the covid-19 pandemic.
“The funding system doesn’t work at all anymore. Local councils have done miracles for 13 years but there’s no money left,” said Sigoma chairman Stephen Houghton, who appealed to the government for help.
Before Birmingham, the London Borough of Croydon and the town of Thurrock, east of the capital, filed for bankruptcy a year ago.
“The central government has let the municipalities live up to date […] for too long,” said Jonathan Carr West, director of the Local Government Information Unit, an association that advises communities. “Birmingham is the biggest council to date to declare bankruptcy, but if something doesn’t change, it won’t be the last. “, he warned.
Source: Ambito
