Government will not bail out Birmingham over cost of equal pay claims, Prime Minister says

The Prime Minister has said the Government will not bail out Birmingham City Council after the local authority reported it still needs to pay up to £760m to settle equal pay claims.

Speaking to a BBC reporter on Monday (24 July), Rishi Sunak said: "[It was] not the government's job to bail out the council for its financial mismanagement.

"The council just needs to do a better job of managing the figures properly and delivering good quality services to residents."

Birmingham reported late last month that it was engaging with external auditors and the Department for Levelling Up, Housing and Communities after a "refreshed" look at its finances revealed it still has to pay up to £760m to settle the claims which date back to 2012.

It described the situation as "one of the biggest challenges [it] has ever faced" and warned that there would be significantly fewer resources available in the future.

In response to the unexpected bill, the council has convened a panel of elected members, chaired by the Leader of the Council, with the support of an independent expert in local government finance to enhance governance.

Its Chief Executive and Interim Director of Finance have also begun work to develop a Budget Recovery Plan.

The current equal pay liability is in the region of £650m and £760m and continues to accrue at an estimated rate of between £5m and £14m a month.

The council has already paid out £1.1bn in relation to the settlement of equal pay claims since it lost its bid to strike out claims in the Supreme Court in 2012.

Adam Carey