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Bankrupt Birmingham braces for cuts as UK government takes control | Business CNN


The UK government has moved to take control of the country’s second largest city, Birmingham, after the local council declared bankruptcy. earlier this month.

in a letter To the council on Tuesday, the government proposed appointing commissioners to take charge of the day-to-day running of the local authority and oversee a financial recovery plan that could include job cuts, tax rises and the sale of council-owned assets.

The government has also proposed an inquiry to understand how Birmingham got to its current situation. financial disaster.

“I do not take these decisions lightly, but they are imperative to protect the interests of Birmingham residents and taxpayers and provide continued assurances to the entire local government sector,” Housing Secretary Michael Gove told UK lawmakers. United in the House of Commons. on Tuesday.

“The need for action in Birmingham is pressing,” he added.

The largest British city after London is one of a growing number of local government authorities in the United Kingdom facing serious funding shortfalls, partly as a result of deep cuts in central government spending over the past decade that have left to the British public services in disorder.

Birmingham City Council issued a so-called section 114 notice on September 5, meaning it must stop all spending except on essential services such as education, housing, social care, waste collection and road maintenance.

The council’s financial problems are partly due to hefty compensation claims it has had to pay to former employees who were historically paid less than men for similar jobs.

The council has already spent £1.1 billion ($1.4 billion) over the last decade to resolve these claims, which continue to rise, and now expects to have a budget deficit of £87 million ($109 million) for the 2023-24 financial year. .

A financial recovery plan for the city released Tuesday suggests job cuts, the sale of land and buildings, tax increases on residents and businesses, and additional government funding may be needed to address Birmingham’s financial problems. .

“Our work to address the situation must be urgent and will involve difficult decisions about what we deliver, how we operate and the shape and size of the organisation,” council chief executive Deborah Cadman said in the report.

The plan will be discussed at a special council meeting on September 25.

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