Birmingham City Council essentially files for bankruptcy and stops all but spending for necessities.

The largest local government in Europe has issued a Section 114 notice prohibiting all spending except for what is absolutely necessary to safeguard core services.

The constraints are a result of a £760 million settlement cost for equal pay claims.

The Labour Authority's head and deputy leader said the notice was a "necessary step as we seek to get our city back on a sound financial footing" in a joint statement.

This notice, which has previously been issued by councils like Croydon and Thurrock, indicates that a local authority believes it is in a financial crisis and is unable to balance its budget.

The authority said that the cost of paying equal pay claims was rising at a pace of £5 million to £14 million per month.

It claimed that although it was in a situation where it had to cover the responsibility that had already been incurred, it lacked the wherewithal to do so.

It also stated that Fiona Greenway, the council's temporary director of finance, had issued the Section 114 notice due to the circumstances, which indicated there were not enough resources to cover the equal pay expense and that there was no alternative option to cover the responsibility.

"The council's senior officers and members are committed to dealing with the financial situation," the leaders said in a statement. "When more information is available, it will be shared."

(Sources: bbc.co.uk)