The local authorities running Britain’s second-largest city, Birmingham, have shifted focus on maintaining vital services as they declared the council effectively bankrupt due to an annual budgetary shortfall of millions of pounds.

Birmingham City Council, which is run by the Opposition Labour Party and is the largest local authority in Europe comprising over 100 councillors, issued a Section 114 notice on Tuesday to say that all new expenditures with the exception of protecting vulnerable people and statutory services will stop immediately.

The council said the dire financial situation arose as it must fund an “equal pay liability” that has accrued to date in the region of GBP 650 million to GBP 760 million, but it does not have the resources to do so.

“On that basis, the Council’s Interim Director of Finance, Fiona Greenway, has issued a report under section 114(3) of the Local Government Act, which confirms that the Council has insufficient resources to meet the equal pay expenditure and currently does not have any other means of meeting this liability,” the council statement reads.

“The Council will tighten the spend controls already in place and put them in the hands of the Section 151 Officer to ensure there is complete grip. The notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately,” it adds.

The U.K. government’s Department for Levelling Up, Housing and Communities (DLUHC) said it had been “engaging regularly” with the council in recent months over the “pressures it faces” and had “expressed serious concern over its governance arrangements”.

“We have requested written assurances from the leader of the council that any decision regarding the council’s issues over equal pay represents the best value for taxpayers’ money,” DLUHC said.

Andy Street, the Mayor of the West Midlands region which covers Birmingham, said the news was “deeply disturbing” for residents and called for an “inquisition” into what had happened.

“It is no secret that local authorities up and down the country have faced significant cuts over the past decade – even if the funding from government has been improving in recent years – and it has been a real challenge to keep services running to the standard that people expect,” said Street.

“However, the huge majority of councils of all political colours are managing to achieve this, with bankruptcy extremely rare,” he added.

Birmingham Council has paid out almost GBP 1.1 billion in equal pay claims since a landmark case was brought against the authority in 2012. The U.K. Supreme Court ruled in favour of 174 mostly female employees – working in roles such as teaching assistants, cleaners and catering staff – who had missed out on bonuses, which were given to staff in traditionally male-dominated roles such as refuse collectors and street cleaners.

In a joint statement, council leader John Cotton and his deputy, Sharon Thompson, said: “Like local authorities across the country, it is clear that Birmingham City Council faces unprecedented financial challenges, from huge increases in adult social care demand and dramatic reductions in business rates income to the impact of rampant inflation.”

“Despite the challenges that we face, we will prioritise core services that our residents rely on, in line with our values of supporting the most vulnerable.”

An investigation by the UK’s healthcare agency NHS has linked the arrest of a nurse to death of three babies under suspicious circumstances at the hospital where she worked. According to The Telegraph, the nurse used to work at Birmingham Children’s Hospital but her identity has not been released. The 28-year-old was arrested on suspicion of administering poison with intent to endanger life. This comes shortly after the conviction of another nurse named Lucy Letby on charges of murdering seven babies.

Though the probe was launched last year, after the baby’s death, the nurse remained under investigation this weekend. She has not yet been taken back by the hospital, and the regulator too has suspended her, which means she cannot work as a nurse elsewhere.

All the families of the children involved in the review in Birmingham have been informed, said The Telegraph.

“In May 2022, a child on the paediatric intensive care unit at Birmingham Children’s Hospital deteriorated suddenly and unexpectedly. Due to the circumstances of the deterioration, the trust acted straight away,” Dr Fiona Reynolds, NHS trust’s chief medical officer, said in a statement.

“A member of staff was suspended from work and subsequently arrested at home. Sadly, the child later died and our thoughts remain with the family,” she added.

According to Metro, the NHS trust passed the findings to the police.

Meanwhile, Lucy Letby was accused of harming 17 babies, some of them just days old, between June 2015 and June 2016.

In the majority of cases she is believed to have injected them with air but prosecutors also accused her of introducing insulin or too much milk.