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Boss apologizes for UK city's bankruptcy

By EARLE GALE in London | China Daily Global | Updated: 2023-09-18 08:56

The city center of Birmingham. [Photo/VCG]

Birmingham City Council leader says shock financial crisis was unexpected

The man in charge of the local government in the United Kingdom's second-largest city has apologized for its sudden bankruptcy and insisted he had "no prior notice" of what was about to happen when he went on a family vacation to the United States.

Councilor John Cotton, the leader of Birmingham City Council, told the BBC "all council activity" was under review in the city of 4.3 million people following the bankruptcy declared on Sept 5, with the city directing its limited funds toward services for vulnerable people and statutory services, including refuse collection, the provision of education, and adult social care.

"It is clear we are facing a number of challenges in Birmingham, so I would like to start by offering an apology on behalf of Birmingham City Council to the people of the city," he said on Sunday in an interview with the BBC's Politics Midlands. "I am apologizing for the impact we know this has on citizens. We are having to review all of our council activity, and look at where we make our spend, but my priority is that we continue to focus on frontline service delivery, the things that matter most to the people of this city."

Cotton said the bankruptcy surprised him but was unavoidable once the city realized it had insufficient funds to meet its obligations.

He told the broadcaster he has met with Michael Gove, a member of the central government's Cabinet, to talk about help the nation may offer as the city grapples with an immediate budget shortfall of 87 million pounds ($108 million).

The municipality is thought to have total debts of around 1 billion pounds.

Cotton said he is hopeful that, with support from Gove — the secretary of state for levelling up, housing, and communities — the city will be able to unveil a financial recovery plan at a meeting on Sept 25 that could also feature the naming of assets it may need to sell, and the listing of services and jobs that could be cut.

The municipality got into financial difficulty after a court case ended with it told to pay 760 million pounds to employees who had been underpaid under the UK's equal pay legislation.

The municipality has also had major difficulties with a new computer system that has been delayed and gone over-budget. The system, which was initially supposed to cost 19 million pounds, has now taken three years longer than expected and is set to cost 100 million pounds.

Cotton told the broadcaster he knew ordinary people were grappling with high inflation and poor pay rises and a major cost-of-living crisis and did not want to hear about the council's crisis that added to "the burdens of people in the city".

He added that the problems that flared in Birmingham could spark elsewhere after what he described as "10 years of austerity and cuts to services" made by the central government.

In the meantime, Birmingham's computer system is so dysfunctional that employees have not been able to produce detailed reports about the situation, prompting external auditors to refuse on Friday to sign off on a financial statement for 2022/23 as well as statements for 2020/21 and 2021/22, Sky News reported.

With the city in such difficulty, the West Midlands Combined Authority has said it may step in and take over some large-scale projects that member municipality Birmingham will not be able to deliver.

The Times newspaper said Gove, the central government minister, will announce on Tuesday that he will appoint commissioners to take over the day-to-day running of the municipality.

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