Birmingham City Council refuses to come clean on £760m bill because ‘could prejudice legal action’

Birmingham City Council is refusing to explain how it has resolved the huge equal pay bill it has cited to justify its “bankruptcy”, claiming it could put “vibrant” legal action at risk.

The disclosure came in response to a Freedom of Information Act request by BirminghamLive, amid growing concern about the accuracy of the oft-quoted “£650m to £760m” liability bill. The sum was cited to justify an emergency spending freeze last June.

It continued to be the catalyst for the beleaguered council which said it could not set a legal budget without exceptional aid. The resulting financial crisis caused the Government to appoint commissioners sent to oversee the council’s affairs.

READ MORE: The £760m equal pay bill that hit Birmingham Council is ‘not a real number’ so stop asking about it – Caller

Also cited as causes of the crisis are the catastrophic failure of a new council IT project, known as Oracle, and the failure to implement savings and cuts in previous years, along with rising demand for social care for adults and children, homelessness costs and related bills. families with special needs. Council Tax has increased by 10% this year and next year, hundreds of jobs are up and local services are being cut as a result.

But for months our attempts to get the council to explain how the sum was arrived at and how realistic it is have been blocked. We are not alone in our curiosity. Academics, financial experts and local politicians are among those who have been trying for months to make sense of the numbers. Union leaders have previously told us they have “no idea” how the figures were reached.

Now, in response to our Freedom of Information request, the council has shared some details and explained why it won’t say more.

READ MORE: Blame, calls for resignations and fear for vital services as Birmingham City Council faces financial chaos

We asked the council to explain the basis of the figures and the formula used to arrive at the high figure repeatedly cited by council leader Cllr John Cotton and then chief executive Deborah Cadman. In its response, the council confirmed that it had the requested information but considered it “exempt from disclosure” as it would or could prejudice (the council’s) commercial interests.

They say its “commercial interests” in this case “refer to its “ability to participate competitively in the commercial activity of negotiating agreements to resolve its potential equal pay liability in a manner consistent with its obligation of Best Value”.

They reveal that the council’s estimates of potential equal pay liability – the figure of £650m to £760m previously referred to – are based on allegations of unequal pay that were made in a case of actual litigation and on the legal advice that was given regarding the risk of litigation. Disclosure of a breakdown of those estimates would reveal the issues currently in litigation, and disclosure of the methodology used to calculate those estimates would reveal the board’s assessment of risk related to those matters, which would not only prejudice the board’s position in the dispute he has. would currently harm its commercial interests when attempting to resolve that dispute and any resulting litigation by weakening its bargaining power and thereby its ability to participate competitively in negotiations”.

The FOI response adds: “Revealing the mechanics of those figures would distort expectations and create assumptions, which would then prejudice the Council in its business of ensuring financial stability for the organization by closing its potential equal pay obligation.”

In justifying its refusal to provide the requested information, the council says it was highly likely to prejudice legal proceedings and this “overrides the public interest”. “The council recognizes that there are significant public interest arguments in favor of transparency in financial matters and the administration of public funds… and a strong public interest in the disclosure of information which ensures transparency in the way the local authority operates and in increasing the transparency and accountability of senior management and members, to increase public confidence in the management of the potential equal pay obligation’.

“However, the substance and nature of the requested information, if disclosed, would adversely impact the ability of the officers charged with resolving the issues underlying the Board’s equal pay risks and current and potential claims related to those risks” .

They also advise that the amounts involved “are subject to ongoing review, audit, litigation and negotiation.”

“Furthermore, as the matters informing the council’s estimates of potential equal pay liability represent significant financial issues and significant commercial interests for the Council, the risks of prejudicing them by disclosing the requested information could not be tolerated.”

The council’s chief commissioner, Max Caller, previously said the figures involved were not “real” but “suggestions” based on the worst-case scenario. In a recent interview, he said: “A number has been reached – it’s a provision in the accounts. Boards need to assess the risks they face and what provisions they need to keep in those balances to cover those things like anything. other financial organizations This is not unusual.

“When these risks materialize or are demonstrated to no longer represent a risk, they are changed to real numbers.” He said the board was on target to reach a resolution on equal pay and introduce a new jobs and pay policy by April 2025. He said of trying to clarify likely liability now: “No it’s a lot of time and I spend time to calculate another provision. it’s a waste of time. It’s not about closing the debate,” he added.