Birmingham, Britain’s second-largest city, declared bankruptcy on Tuesday, halting all non-essential spending after receiving equal payment claims of up to 760 million pounds, CNN and The Guardian reported.

Birmingham City Council, which serves more than a million people, took action after the city’s budget estimated it was about £87m short after female staff demanded hundreds of millions of dollars in compensation because they were being paid less than their male colleagues.

UK law provides that this type of claim can be made if:

• the person receives a lower salary than a person of the opposite sex;

• if a person of the opposite sex performs the same working hours;

• if there is no reason for the difference in payment between the two persons.

Sharon Thompson, Birmingham City Council’s deputy leader, said on Tuesday that the city was “dealing with issues that are years old” and that they included differential pay for local government and service workers.

But she accused the Tory government led by Rishi Sunak of cutting funding to the city, just like “successive Tory governments” which she said had widowed the local budget by £1 billion.

But Sunaka’s spokesman said on Tuesday that it was “clear that local councils have to manage their own budgets” and that the government “regularly discusses with them” how taxpayers’ money is being spent properly.

John Cotton, chairman of the local council, told the BBC that a new pay model would be developed to avoid similar situations in the future.

The British city organized a grand sporting event, despite financial difficulties

Problems have also arisen as the multicultural city in central England hosted the Commonwealth Games, the premier sporting event for the countries of the former British Empire, last summer and is set to host the 2026 European Athletics Championships.

Max Culler, a former member of the local council, called the hosting of last year’s games “an obvious mistake”.

“Problems with councils [locale] the problem is that they should focus on getting better instead of trying to do nice things. There is a limit to political and managerial power and if you spend your time organizing the Commonwealth Games, you will not be able to deal with the serious problems that you have already faced,” he said.

His comments come as other British cities face similar problems and have used Birmingham’s plight to sound the alarm about their own difficulties.

Birmingham City Council has assured that essential services will continue to operate until a solution is found.