Birmingham City Council has revealed that it faces “significant” additional equal pay costs as high as £760m – with the authority calling it “one of the biggest challenges this council has ever faced”.
Following the implementation issues of the authority’s Oracle IT system, Birmingham undertook an analysis of the council’s ongoing equal pay claims. The pay claims are due to a Supreme Court ruling in 2012, which found that Birmingham had denied female workers bonuses given to male colleagues.
The analysis revealed that despite Birmingham already paying £1.1bn of equal pay claims, the authority’s equal pay liability is estimated to be between £650m and £760m as of 31 March 2023.
Birmingham City Council also stated that this liability is growing by between £5m and £14m each month, with the authority not being able to pay this “huge sum” from existing resources, which include reserves.
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“To put the scale of this financial challenge in context, the council’s entire revenue budget for a year stands in the region of £750m, which is used to fund services across the city,” the council said in a statement.
“This is one of the biggest challenges this council has ever faced, and we apologise for the failure to get this situation under control.
“It means there will be significantly fewer resources available in the future compared to previous years and we will need to reprioritise where we spend taxpayers’ money.”
The authority stated that it is currently engaging with external auditors and the Department of Levelling Up, Housing and Communities over the situation “to explore a number of possible solutions”.
It also outlined that the authority will put in place a panel of elected members, chaired by the leader of the council and the support of an independent expert in local government finance, to monitor the situation.
Union response
In response to the additional pay costs, Michelle McCrossen, union GMB’s organiser, said: “GMB members in Birmingham City Council have been campaigning for equal pay for years, because we believed that the council’s pay scheme discriminates against its women workers.
“The extent of the discrimination is far worse than anyone could have imagined, and it’s clear the council has learned nothing from their shameful history of undervaluing women’s work.
“The explosive admission from the chief executive completely blows apart the council’s legal defence, so it’s now time for them to get serious about meeting with GMB and repaying the wages stolen from their low paid women workers.”
This news comes as Birmingham City Council revealed last week that it is to spend £100m to fix implementation issues with its Oracle IT system, which is impacting on its ability to close its 2022/23 accounts.
The council revealed that £46.53m is needed this financial year to resolve “urgent issues” with the IT system.
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