Balancing the books in Birmingham

September 8, 2023 2:32 AM

In 2010 Female council workers in Birmingham (Britain's second-largest city) won a £200m equal pay case after the Tory-Liberal Democrat administration gave 'bonuses' to male workers only. Along with other losses over the years, this led to the council finally issuing a section 114 notice, effectively declaring itself bankrupt in Sept 2023.

The initial lawsuit was contested leading to a 2 year legal fight ending in 2012 when they settled for around £757m
To help pay for this, the council, sold off several of their largest assets, the NEC Exhibition Halls and the International Convention Centre to NEC Group for £307m.
4 years later those same assets were sold again to the private equity group Blackstones for £800 million.

In 2018 Birmingham council started a project to replace their SAP system with Oracle, the project was reviewed in 2019, 2020, and again in 2021 with costs escalating from £20 million ($24.9 million) to £38.7 million and then in 2022 to £100 million (125 Million USD).

posted by Lanark (24 comments total)

What happens if a [UK] council goes bankrupt?

The link sets out the wider issues, such as noting the effective 29% decrease in funding to councils from 2011-8 (and this has continued to go down I think) and outlines the relatively small set of ways that councils can increase their income.
posted by biffa at 3:03 AM on September 8, 2023 [2 favorites]

Under a bonus scheme, male refuse collection staff sometimes received up to 160% of their basic pay.

As a former public employee in the US, any form of bonus for public positions seems incredibly odd. While public service isn't the most lucrative, you at least knew what you were going to make before taking the job.
posted by johnjreiser at 4:31 AM on September 8, 2023 [3 favorites]

It's worth noting that while Birmingham is the largest council of its kind in Europe, it's not the first UK council to declare bankruptcy recently. Croydon did, Thurrock did, Hackney, Woking, Slough, Northumbria and Northamptonshire all have too, and the Independent lists twenty more in danger of going the same way. Financial mismanagement has played a part in many of these, but so have the swingeing cuts imposed by central government since 2010. This Institute for Government report (originally from 2020, updated in July this year) lays out the situation in stark terms.
posted by Hogshead at 5:07 AM on September 8, 2023 [9 favorites]

Bankruptcy law around the globe needs to change. It's currently both a get-out-of-jail-free card (cf the Sackler family, Johnson & Johnson) and an exploit for private equity. It's just another financial tool for the oligarchy.

But never for student loans, of course. Gotta keep the little people in their place.
posted by Dashy at 5:41 AM on September 8, 2023 [9 favorites]

So is there anything suspicious in the NEC sale for £307 being turned around for £800 a few years later? I could imagine scenarios either way.
posted by GenjiandProust at 5:47 AM on September 8, 2023 [2 favorites]

Commercial property prices increased about 15 or 20% in those 4 years which is some way short of the 260% rise in the NEC assets, so either Blackstone paid too much or the council sold too cheap.
posted by Lanark at 6:09 AM on September 8, 2023 [2 favorites]

Am I right in thinking it was partially the appealling against the equal pay act decision that landed them in this issue?
posted by treblekicker at 6:16 AM on September 8, 2023

Large Oracle projects so regularly go over way budget I’m surprised it’s news to anyone.
posted by armoir from antproof case at 8:47 AM on September 8, 2023 [2 favorites]

Given how much private enterprise tends to treat government pockets as endlessly lootable, this is my surprised face about all of the overruns.

But what I really want to know is - what was the publicly stated reason for the whole "men=bonus, women=hahahaha" scheme. I know, "sexism and women have a husband bringing home the main pay so it's ok to pay them less", but there's almost always a socially acceptable fig leaf of justification. Or was it really as simple as "we all know they're lesser, so they get less. Right, boys?"
posted by drewbage1847 at 9:33 AM on September 8, 2023 [1 favorite]

Am I right in thinking it was partially the appealling against the equal pay act decision that landed them in this issue?

It didn't help.

On top of that, there's a reasonably lucrative market in offering to help people make their equal pay claim. They advertise on buses. I suspect the council don't know how many people are going to come forward and so don't know how much it is going to cost in total. They would benefit from a legal time limit on new claims being put in place (similar to mis-selling compensation), but I imagine that would need legislation.

what was the publicly stated reason for the whole "men=bonus, women=hahahaha" scheme

Not clear. The bonuses seem to have been specifically for refuse collectors (hinmen/dustmen). That's a notoriously important service to local residents, with a strong union and a historically male workforce. I can see how someone would argue a special case for them without thinking about the wider implications. Where the council appear to have gotten into difficulties is that all other jobs on the same grade as refuse collectors were historically and currently female dominated

At the time of the original decision, the lawyer representing the affected women speculated that it could cost the council £600m. Trade unions dismissed this as "mad" and thought it would be around £30m.
posted by plonkee at 9:54 AM on September 8, 2023 [3 favorites]

Also, from what I've read the problems with the Oracle implementation appear to have been caused by wanting a lot of bespoke customisation from the IT rather than adapting internal processes to work with the system out of the box. Given an individual local authority is hardly unique either they bought the wrong service entirely or they were wrong to customise it so extensively.
posted by plonkee at 10:05 AM on September 8, 2023 [1 favorite]

As a programmer, I am embarrassed to ask, but what do Oracle and SAP actually DO? This is customizing data collection (forms) and report generation?
posted by dame at 10:36 AM on September 8, 2023 [2 favorites]

I mostly know them as scary voids that swallow programmers and also sometimes people working for them make a lot of money.
posted by dame at 10:37 AM on September 8, 2023 [8 favorites]

Both SAP and Oracle are, in this context, large enterprise operation systems. Track the money, track your work and control your processes. They're large and hairly complex because there's no single way that an organization runs. There are some common threads, but everyone is different. "No, no... you use this form to request a wrench, but this one for hammers and don't forget to submit your expense reports and have them approved by these 3 managers unless you're union, in which case it goes through these 3"

So, SAP and Oracle both have utterly generic solutions that are infinitely configurable and that configuration support is where they really make their money - tailoring their monster rubber ball fit your glue factory.

And thanks for the context plonkee (re: the payments) - if that's the case, it sounds like the council should have ideally created a different grade for the garbage crews and instead stepped into a wonderful stew of who gets valued, what jobs get valued and how much gender plays into it.
posted by drewbage1847 at 10:51 AM on September 8, 2023 [3 favorites]

Ah, so JIRA for normies! Thank you.
posted by dame at 11:03 AM on September 8, 2023

Oh god, if only SAP/Oracle was as nice as Jira! (And I loathe the way Jira has turned into a general work tracking tool over a bug tracking system)
posted by drewbage1847 at 11:06 AM on September 8, 2023 [4 favorites]

Even with the price increases for Jira, it's not taken down a whole town yet. That I know of.
posted by mdoar at 11:49 AM on September 8, 2023 [2 favorites]

And thanks for the context plonkee (re: the payments) - if that's the case, it sounds like the council should have ideally created a different grade for the garbage crews and instead stepped into a wonderful stew of who gets valued, what jobs get valued and how much gender plays into it.

Yes. Every else does refuse collection without triggering the kind of disaster Birmingham did so I assume it's not all that difficult.

But then if I had £1 for every time Birmingham City Council made an ill-thought through decision I would be considerably richer than I am now (or the Council itself come to think of it).
posted by plonkee at 12:29 PM on September 8, 2023 [3 favorites]

Thanks for posting this. Birmingham's children's services were judged Good by Ofsted this year (the report) which is a major achievement given the areas of deprivation and the size of the LA - 286,509 children, third largest in the country. The services were removed from direct LA control and put in a trust a few years ago (Guardian article), as with several of the other LAs Hogshead lists as having declared bankruptcy.

I don't think it would have helped to regrade the waste management posts - as the issue still would have been that jobs which were not on the face of it similar, were paid less and were more usually held by women, in fact had similar levels of skills and experience needed so should have been similarly rewarded. I remember loads of coverage of this in the Unison magazine at the time.

Waste management posts are difficult to recruit to (Guardian coverage in 2021) - but that applies to many posts more often held by women too.
posted by paduasoy at 3:07 PM on September 8, 2023 [2 favorites]

I don't think it would have helped to regrade the waste management posts
Realised I may have misread this - yes, regrading them downwards might have helped, just not putting them on a formally different grade.

And here is the 2022 gender pay gap report for the Council. Men on average earned 3.1% more than women. Without going to check (I used to work in this area but haven't for a couple of years), I think this is a fairly standard figure for LAs. The Trust (2023 data) has a negative gender pay gap of -1.3%, which I imagine is due to the number of women who are senior social work managers in children's services.
posted by paduasoy at 3:22 PM on September 8, 2023

The pay structure now is very different. The non-equal pay structure in the original claim was in place until 2008 before being amended. It’s decisions taken probably 20 or more years ago that are behind that specific mess.

Good to see that the children’s services are Good. The housing is less so.
posted by plonkee at 5:00 PM on September 8, 2023

While I understand that on the internet all tories are evil, the case related to a bonus system that dated back decades - probably to the 1970s. The original hearing found that the council had been aware of the issue as late as 1997, but it wasn't changed until 2007. Birmingham was a Labour council from 1984 to 2003.

Meanwhile the case was decided in 2012, and the bankruptcy is really happening because the council didn't act adequately since then. Birmingham has been a Labour council since 2012.

So no, this was not "the Tory-Liberal Democrat administration."
posted by benedictevans at 1:57 AM on September 9, 2023

So no, this was not "the Tory-Liberal Democrat administration."

Well it was, just Labour ones too. No party in Brum has clean hands.

This while saga should point to your national political allegiances being irrelevant in the case of council elections. Look into your local parties, your local council. There are a lot of shitty, corrupt, pocket-stuffing arseholes from all parties in these positions, riding the goodwill of their national party to local electoral success. Labour are just as bad for this as everyone else.
posted by Dysk at 2:58 AM on September 9, 2023 [4 favorites]

On top of that, there's a reasonably lucrative market in offering to help people make their equal pay claim. They advertise on buses. I suspect the council don't know how many people are going to come forward and so don't know how much it is going to cost in total. They would benefit from a legal time limit on new claims being put in place (similar to mis-selling compensation), but I imagine that would need legislation.

There is actually a pretty short time-bar for these cases, 6 months in an employment tribunal.

The claimants therefore brought a case in the high court where the limitation is 6 years. The council appealed this all the way to the Supreme Court on the basis that the appropriate venue was an ET and not a normal civil court, on appeal the court allowed the high court decision to stand on the basis that it could never be "more appropriate" to hear a case in a venue where it was time-barred by statute than one where it was not.

Essentially I think these workers were luckily able to take advantage of sloppy legislating, it was clearly parliament's intention to time-bar these claims after six months when the ET legislation was drafted but that's just too bad for the council because the case could in fact be heard at the high court which never had such a time bar put in place.

We can expect a whole wave of such cases to hit local authorities across the UK btw, I have never seen such a bunch of muppets as the officers and councillors running local government here. The ministers and civil servants of central government are titans by comparison.
posted by atrazine at 2:09 AM on September 13, 2023