A Labour-run council has effectively declared bankruptcy, leading to mockery from Conservative MPs who are equating it with the way a Labour government would run the UK – wrongly.

Yes, Birmingham City Council has issued a section 114 notice, confirming that all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately – after receiving a £760m bill to settle equal pay claims.

It comes after a Supreme Court ruling back in 2012 found in favour of mostly female employees of Birmingham City Council – and that a bonus scheme that was handed out to staff in certain roles favoured those which were mainly taken up by men.

The Tories caused the problem that led to Birmingham Council’s woes

But here’s the kicker: the court ruling relates to people who were working at the council from 2004 to 2010 – when it was not controlled by Labour. Indeed, records show that in 2004 – the year from which claims could be made, the council was run by the Conservative Party, in coalition with the Liberal Democrats.

For most of the period covered by the court ruling, the council was under no overall control.

The plot thickens

When the council originally lost its Supreme Court appeal, back in 2012, it had been ordered to save £600 million by 2017 – by the Conservative/Liberal Democrat Coalition government.

It could afford to borrow £429 million of the £757 million it was expecting to have to pay – but would have to get special dispensation from the government of the day to take out any more loans.

It seems likely that no such dispensation was forthcoming. This would indicate that it is not Labour, but the Conservatives, who are responsible for Birmingham Council’s precarious financial position.

So when MPs like Richard Holden, below, took to the social media to say things like

🥀 Goodness me – second largest council in the country, effectively bankrupt by Labour 🥀

Imagine what they’d do to the country… again… https://t.co/J6W70oIi6x

— Richard Holden MP (@RicHolden) September 5, 2023

he was wrong. The council has been bankrupted by his own party (with help from the Liberal Democrats). Or so it seems to This Writer.

Some Tories, like Simon Clarke (below), have claimed that Birmingham is just one of many Labour-run councils that are now bankrupt. But this is to deny that Conservative-run councils are also out of money, as the context box indicates:

Birmingham joins a long list of Labour run councils that have gone bust – Croydon, Nottingham, Slough.

This year councils’ core spending power rose 9.2%.

It is not good enough for councils to claim poverty – they need proper leadership and innovation. https://t.co/HFY4pVEmKJ

— Simon Clarke MP (@SimonClarkeMP) September 5, 2023

The vast majority of local authority funding comes from central government in the form of the Aggregate External Grant (AEG). It is this money that pays for the vast majority of council services.

The government of the day determines the amount to be given to each council.

This means that, if any council is struggling to provide services, it is likely to be because the Westminster government has not provided enough AEG funding.

So, again, it seems the Conservative government – not individual councils, no matter what the colour of their ruling political group – is responsible if any councils are in danger of financial collapse.

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