A few weeks ago I was standing in front of my window with a cup of coffee, watching the world go by. A tiny woman walked past, hauling around five massive black bin bags behind her. As she reached the gate of the adjoining property, she quickly glanced around, making sure there were no witnesses and, one-by-one, threw each bin bag over the fence. My fence. As she turned around, I caught her eye and she sprinted off. Rather than voice disapproval, I couldn’t help but laugh, both at the absurdity of the situation and the chain of events that had brought the woman and I to this impasse.
A cascade of problems have led to Birmingham’s current bin strikes. But the most notable contributing factor is the city council’s decision to claim bankruptcy in autumn 2023. This move directly resulted in the industrial action.
Why? Well the council is currently proposing to reduce the wages of refuse collectors by up to £8000, to avoid equal pay liabilities. These liabilities come about when different council occupations, at the same grade of seniority, are paid varying wages. There’s three parts to this though. Firstly, the council can’t afford to bring the salaries of office cleaners — mostly women — on a par with refuse workers — mostly men — despite them often sharing the same grade (even though they involve very different skillsets). Secondly, the council has the added burden of bringing all the other unequal salaries into parity. Thirdly, the council is now left with very few incentives to draw workers into often cold and physically tough business of bin collection. Indeed, higher salaries were used to resolve a previous bin strike in 2017.
Obviously, the best case scenario would be for bin workers to keep their existing salaries and for women-dominated roles, like office cleaners and secretaries, to receive a salary bump to bring them into line with colleagues.
But this solution isn’t possible. Why? Because the council is bankrupt and therefore cannot take on any extra spending. Why is the council bankrupt? Ironically, the dominant narrative holds equal pay claims responsible in the first place; they’re the straw that broke the camel’s back. The oft told story of Birmingham City Council’s bankruptcy goes a little something like this: after the 2010 Equality Act was passed, a load of jobs with gender imbalances became liable to claims, thanks to some controversial wording on “equal value” that was imported from EU legislation (which Labour had previously rejected in the 1970s). Public sector bodies were slow to catch up with this change. So, over the past decade, a series of spiralling equal pay claims, dating back to 2012, were mounting for the council.
The Dispatch
In contemporary retellings, these equal pay claims were a ticking time bomb, stashed in a locked box somewhere in Birmingham’s council house. It’s easy to get the impression that very few people knew about the cost of equal pay until June 2023, when breathless national headlines reported the council was on the hook for £760m worth of equal pay settlements. The local authority was pushed into bankruptcy just four months later.
But such a figure wasn’t a surprise. In fact, in 2012, when Labour took control of Birmingham City Council, The Guardian was reporting a potential £757m equal pay liability. The city’s auditors, Grant Thornton, suggested that the claims might “negatively impact [the] city’s financial resilience,” despite “managing its finances well.” That year, Sir Albert Bore, the leader of the council, would argue that the council was risking bankruptcy, especially if a £325m loan from Westminster was refused.
Despite this crisis point, Birmingham weathered the storm through cost cutting. In 2013, facing the withdrawal of local council grants from Westminster, Labour slashed services to the tune of £102m, with Albert Bore claiming that: “The financial challenge facing local councils may be the end of local government as we know it.”
During this period, council tax income for Birmingham decreased by 10.7% and government funding by 77.8%. In the context of these headwinds, the council still managed to report a balanced budget up to 2022, and only modestly drew on its reserves. By the end of 2022, the revenue budget deficit was only £3.2m. In 2021, the independent CIPFA, an agency which ranks council’s solvency and accounting performance, gave Birmingham a 3* award, up from 1* in 2019. They praised the council’s “success in revolutionising its finance function”. Things seemed to be on the right track, so what happened?
There isn’t a simple answer to this question. The city’s solvency survived Conservative austerity, Brexit, and the economic hit of Covid-19 all while dealing with historic equal pay liabilities. Why did a figure of roughly £760m, which had been floating around since 2012, suddenly force a Section 114 notice — the public sector equivalent of bankruptcy?
More importantly: where did this £760m figure come from? This giant bill was generated by the council with guidance from auditors Grant Thornton, based on prior management of accounts and worst-case-scenario planning. But according to the University of Sheffield’s Audit Reform Lab, these numbers were never properly audited — the model that generated them wasn’t shown to Grant Thornton. Instead, the number was made public in 2023, because the council’s finance officers decided it was “material enough to warrant disclosure.”
The Dispatch
At the time, council leader John Cotton was completely blindsided by the figure, expecting to be able to settle with the unions pursuing the claims for around £120m. He claimed he was not made aware of the £760m quoted until after he had become leader and a budget had been set in February 2023 (although the council’s former HR director disputed this, claiming Cotton was one of an inner circle who was informed of the amount early that month).
Then the cuts started in earnest. Birmingham’s leaders were immediately gelded by the then-Conservative government, with commissioners airdropped in to sort it out the mess. This meant slashing non-statutory services to the bone, asset sales and rises in council tax. Birmingham became the poster child for local authority incompetence, such was the staggering scale of that £760m. Michael Gove, then Secretary of State for Communities, lambasted the council for “under-performance, poor leadership, weak governance, woeful mismanagement of employee relations and ineffective service delivery.”
Now we know the figure was wrong. Officially, Birmingham City Council’s equal pay liabilities are now between £250m and £260m, numbers made public in Spring 2024. Why was the £760m not questioned sooner? Michael Gove falsely claimed the number had been audited — it wasn’t. Max Caller, Gove’s lead commissioner, ignored opposition councillors querying the figure, saying that they needed to “stop asking pointless questions.”
