An academic report has raised questions about the reliability of Birmingham City Council’s £760m equal pay liability figure and called for an investigation into the decision to issue a section 114.
The Audit Reform Lab (ARL), a collective of academics who investigate auditors, argue that the council’s financial problems were mostly the result of austerity and the ‘disastrous implementation’ of a new Oracle IT system.
The report, which was co-commissioned by the trade unions UNISON, Unite and GMB, claims that the decision to declare effective bankruptcy was initially attributed to a £760m equal pay liability which was ‘speculative and unaudited’.
Auditors Grant Thornton said the ARL’s report contained ‘inaccurate and misleading’ information.
The auditor said that it was inaccurate to attribute the council’s financial problems solely or even predominantly to the troubled roll out of Oracle, adding that service pressures and equal pay claims ‘play a greater part in the council’s financial issues.’
Referring to the £760m equal pay liability figure, Grant Thornton’s statement said: ‘Both officers and commissioners have confirmed that this is the best estimate available of the council’s liability on the available information.’ The statement added that the audit work is ‘ongoing’.
Responding to the auditor’s criticisms, Dr James Brackley from ARL said: ‘We circulated our report with all interested parties and took considerable care to ensure factual accuracy throughout the report. This included a lengthy discussion with Grant Thornton about our findings.
‘It is our view that the objections raised by Grant Thornton relate to points of interpretation not fact and we can see nothing in their comment to the press that contradicts any of the points made in our report.’
Check out: The financial crisis in Birmingham City Council.
