UK to appoint commissioners to run 'bankrupt' Birmingham

FILE PHOTO: British Secretary of State for Levelling Up Michael Gove walks outside 10 Downing Street in London

LONDON (Reuters) -British minister Michael Gove said on Tuesday the government had been forced to intervene in the day-to-day running of England's second-largest city, Birmingham, which earlier this month effectively declared bankruptcy.

Gove said he would appoint commissioners to take over the running of Birmingham City Council - the largest local authority in Europe - having determined that the council had failed to comply with its duties.

"I'm proposing the transfer to the commissioners of the exercise of all functions associated with the council's governance and scrutiny of strategic decision making, all functions associated with its financial governance," Gove, Secretary of State for Levelling Up, Housing and Communities, told parliament.

On Sept. 5, Birmingham issued a 'Section 114 notice', effectively declaring itself in financial distress and no longer solvent as it faced spiralling liabilities relating to historic equal pay claims.

Section 114 notices are issued by a local authority when it cannot find a way to balance its budget. The notice effectively bans all new spending except for essential services such as expenditure to protect vulnerable people and statutory services.

($1 = 0.8071 pounds)

(Reporting by Sachin Ravikumar and Kylie MacLellan, Writing by Farouq Suleiman, editing by William James)