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Earlier this month, Birmingham City Council (BCC) issued a section 114 notice, indicating that it could no longer meet its financial liabilities. BCC which runs a budget of £3.2bn, said that “in June, the council announced it had a potential liability relating to equal pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month. The council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so.” Legally speaking, councils have a requirement to balance their finances, and thus the section 144 was BCC’s last resort.

The financial collapse of BCC brought the fragility of many English Councils sharply into focus. Many now believe that it may be the canary in the coal mine for other distressed councils. According to The Economist, local authorities’ grants from Westminster decreased by a half between 2010 and 2021, with most councils raising taxes to try to fund the shortfall. Nevertheless, English local council’s core spending power still fell by more than 25%, with rising inflation driving up the real cost of providing services. Given that any raising of council tax by 5% or more would require a referendum, any council tax increases have not been able to keep in line with inflation. Councils including Stoke, Coventry, Somerset and Devon now appear to be in troubled water. Indeed, as the Economist suggests “More than 3m people in England are covered by councils that have gone bankrupt. More will join them; the only question is when.”

Speaking to the Financial Times, the Labour Party Leader Sir Keir Starmer maintained that he would look to conduct a major revision to the UK’s Brexit deal as he seeks to build stronger relations with the bloc.

The existing deal – the EU-UK Trade and Cooperation Agreement – was signed on 30 December 2020 and entered into force on 1 May 2021. It covers preferential arrangements in everything from trade in goods and in services to intellectual property, public procurement, fisheries and judicial cooperation.  However, since the Agreement is up for review in 2025, the current Leader of the Opposition believes that this would be an opportune moment to make amendments, if he were in office. Nevertheless, according to the FT, “many in Brussels see the 2025 review as simply a tidying-up exercise” and thus may not wish to entertain any further negotiations.