Birmingham prepares for savage financial cuts

People living in Europe's largest local authority area were braced for bad news as the council running the cash-strapped city of Birmingham prepared to release its draft budget for the coming year on Monday.

The Labour Party-run council provides services for more than 1 million residents, and has become the most high-profile casualty of a financial crisis that has blighted local authorities across England. It was expected to announce huge cuts, with a final decision on the budget due at the end of the month.

Last September, after years of mounting monetary problems, the council effectively went bankrupt, with a deficit for the current year of 87 million pounds ($109.7 million).

Councilors are set to unveil draft spending plans that will likely include significant cuts to municipal services and a sharp rise in the tax bill paid by local residents, which is the council's main source of independently-raised revenue.

More than a decade of cuts to funding from the central government have put local authorities under strain.

In Birmingham's case, its finances were also dented by the loss of a court case about pay equality for its workforce, and the cost of a failed IT system.

Usually, any request to increase tax paid by local residents by more than 4.99 percent requires a local referendum, but Birmingham has been given special dispensation to raise residents' taxes by 10 percent this year.

An advance list of 150 million pounds' worth of proposed cuts saw more than one-third coming from the children and families department.

"As we review the saving proposals for the children, young people and families directorate, it will be inevitable that services will need to be changed as a result, and this process allows us to continue making improvements to provide efficient services," said a statement issued by the council. "We will do all we can to minimize the impact during this difficult time and continue to prioritize the services for the most vulnerable residents in the city."

Hundreds of council workers are also likely to lose their jobs.