Birmingham City Council has reached a pivotal settlement to address historic equal pay claims, resolving liabilities estimated at £760 million that had driven the authority to declare effective bankruptcy.
Union leaders hailed the agreement as a “historic outcome” for female workers, describing it as a major step towards “pay justice.”
The council announced the framework agreement on Tuesday morning, though its full details will remain confidential until formal approval at a cabinet committee meeting next week.
The council confirmed that the cost of the settlement aligns with the exceptional financial support package secured from the government in January.
The financial strain caused by the equal pay claims led the council to issue a section 114 notice in September 2023, effectively declaring bankruptcy.
The massive £760 million liability, combined with issues implementing a new IT system, were cited as key contributors to the financial crisis. Critics later accused the council of potentially overstating its financial difficulties due to unreliable accounting data.
In response to the crisis, the council approved sweeping budget cuts in March 2023, totalling what is believed to be the largest in local authority history. These measures included a 10% council tax increase and plans for a further £150 million in cuts next year.
Council leader John Cotton characterised the pay agreement as a significant milestone in improving relations with unions and addressing past failings. “This framework agreement is intended to mark the start of a new era of productive and progressive industrial relations built on trust and mutual respect,” Cotton said.
The dispute, led by the GMB and Unison unions, centred on pay disparities affecting female-dominated roles such as cleaning and catering, which historically received lower wages than male-dominated positions like waste collection.
GMB organiser Alice Reynolds described the settlement as a monumental achievement for the women of Birmingham.
“This framework agreement sets out a cast-iron plan to settle our members’ claims and pay back their wages after years of discrimination,” she said.
Claire Campbell, Unison’s West Midlands head of organising, called the agreement a turning point. “This is a good day for low-paid women who work at the council. They will at last get the pay justice they deserve,” she noted, emphasising the importance of constructive negotiations.
Despite the progress, Cotton acknowledged the challenges ahead. The council’s next step will involve implementing a new pay and grading system to eliminate pay inequalities once and for all.
This historic agreement brings renewed hope for Birmingham’s workers while highlighting the critical need for structural reform to ensure long-term stability and equity.
