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Bore’s first year overshadowed by Birmingham’s gravest financial crisis

Bore’s first year overshadowed by Birmingham’s gravest financial crisis

🕔10.Jul 2013

A little over a year ago, Sir Albert Bore returned from an eight-year exile in opposition to form his second Labour party administration in charge of Birmingham City Council.

The good news was that he certainly didn’t have to worry about securing a majority in the council chamber, having romped home with a landslide victory to oust the Conservative-Liberal Democrat coalition.

The bad news was that Sir Albert had the misfortune to take the helm in the middle of the biggest financial crisis ever to hit local government in this country. It is no exaggeration to state that the austerity cuts in grant driven by Chancellor George Osborne will in time make anything that Margaret Thatcher did to councils seem like a vicarage tea party in comparison.

One of the problems facing councils up and down the country is that having cried wolf so many times in the past, when there was no reason to do so, few people believe them today when they claim that Mr Osborne’s medicine is threatening the wholesale disbandment of public services.

It can be tedious to get too deeply into financial detail, but the bottom line for Birmingham is that it can expect to lose more than half of its government grant between 2011 and 2016. This is important because government grant makes up over two-thirds of the council’s income, clearly demonstrating how dangerously centralised the governance of this country has become.

The drain in income has to be compared to an ever increasing demand for social services from an ageing population, hence Sir Albert’s Jaws of Doom graph depicting a £600 million shortfall between council resources and demand for services.

Clearly in such a scenario the traditional ‘salami slicing’ approach to cuts beloved by council treasurers because it is easy to achieve simply won’t work this time because the savings required are too great.

To put this into perspective, if the council found the required savings by reducing departmental budgets proportionately the effect would be a 60 per cent cut in all services other than social care and waste disposal by 2020. In other words, Birmingham would be reduced to providing only what it must by law provide – looking after old people and emptying the bins.

All of the old clichés are being trotted out. Working smarter, thinking out of the box, an activist council, radical solutions, blue sky thinking…..but it really all amounts to finding ways of making the council organisation far smaller, safeguarding a very few essential services, and finding someone else to run the rest.

Labour’s first year in office hasn’t been all bad news. There were some quite interesting achievements, but these are probably outweighed by the tough challenges for 2014-15.

Achievements


Living Wage. The very first policy announcement by Sir Albert in May 2011 was to raise the wages of the 3,000 lowest paid council workers from £6.39 to £7.20 an hour. Hugely symbolic for Labour, at a cost to the council of about £1.3 million a year.

Business Charter for Social Responsibility. Firms wishing to do business with the council are urged to sign up to a charter pledging to pay staff the minimum wage, recruit locally and using the “highest ethical standards” in their own organisation. Those refusing to sign up shouldn’t expect to win any contracts with the council.

City Centre Enterprise Zone. Successfully set up via GBSLEP, although planned by Birmingham’s former Tory-Liberal Democrat council leadership. Sir Albert tagged on six economic growth zones to support key sectors including advanced manufacturing, environmental enterprises, life sciences, food, electronics and communications.

Paradise Circus. Work can at last begin on a £500 million transformation of Birmingham’s civic heart, thanks to a £63 million contribution from GBSLEP. The scheme, for new offices and shops, will produce 12,000 jobs, it is claimed.

New Street Station and Metro. First half of the refurbished New Street has opened, while preparatory work on the Midland Metro extension between Snow Hill and New Street has begun. Both schemes were developed and approved by the former Tory-Liberal Democrat coalition.

Wheelie Bins. A £29 million scheme to switch from plastic sacks to wheelie bins infuriated Tory and Liberal Democrat councillors who forecast a city-wide revolt among angry householders. But the roll out of wheelie bins has gone smoothly so far, leaving the opposition with little to talk about.

Telecare Home Service. More than 7,000 vulnerable older people at risk of falls and dementia are now helped to live at home by an electronic warning system. Roll-out began under the former Tory-Liberal Democrat coalition.

Youth Unemployment Commission. Inquiry into Birmingham’s deep-rooted jobs crisis produced the Birmingham Jobs Fund with a council commitment of £2 million and a challenge to businesses to create 1,000 apprentices in 100 days.

Devolution. Additional powers handed to district committees in an attempt to move decision making away from the Council House to local communities.

Challenges


End of local government as we know it. Dramatic, yes, but in the words of Sir Albert Bore service delivery has to change radically to cope with losing upwards of 50 per cent of government grant over six years. Expect some service provision to be handed to the private and voluntary sector, some to disappear altogether and get ready for far more emphasis on families and neighbours helping themselves.

Merging the LEPs. Sir Albert’s big idea is to draw decades of rivalry to an end by declaring peace between Birmingham and the Black Country. That would mean merging the Greater Birmingham and Solihull Local Enterprise Partnership with the Black Country LEP. Would be a very big deal if it ever happened, creating the country’s largest LEP and sending all of the right signals to Whitehall.

Prevention is better than cure (and cheaper). This has been knocking around for years. If only councils could encourage people to live healthier lives and stop them from becoming ill, frail, obese, dependent, then think of all of the money that social services and the NHS could save. The council’s financial crisis makes the focus on prevention more important than ever before, but the timescale to achieve real gains from preventative measures will be lengthy.

Engaging people and communities. It’s definitely not being described as the Big Society, but that’s exactly what it amounts to. Sir Albert describes this as enabling local people to make their own .contribution to tackling problems and designing better services. In other words, removing the burden from the council.

Social Services. Children’s social services look like entering their fifth year under government special measures having been classified as failing. Meanwhile, the cost of running adult social services continues to rise and is threatening to run out of control. One way or another, costs have to be reduced and that probably means ending council-run services for many people.

Birmingham Development Plan. Strategy setting out proposals for new housing and industry over the next 20 years. Certain to be hugely controversial, mapping out proposals for upwards of 12,000 houses on green belt land, chiefly in Sutton Coldfield. Will also propose allowing housing development of a far higher density in order to address shortage of accommodation. Proposals are being worked up for a Housing Investment Company which would use the council’s huge property portfolio to raise private sector finance for new housing.

Equal Pay Bill. The cost of compensating thousands of former staff, mainly women, who were under-paid compared to men carrying out similar work could virtually bankrupt the council. The estimated cost is already over £850 million and may have reached £1 billion. The government is allowing Birmingham to borrow to cover some, but by no means all, of the cost.

Devolution. This is Sir Albert’s biggest idea, but does it actually mean anything very much? He wants the government to hand down budgets and powers to Birmingham via GBSLEP, but all of the signs from the Heseltine Review and the Greater Birmingham Project are that precious little in the way of funding is likely to be coming our way any time soon. More locally, the council leader wants to hand additional powers and budgets to district committees, but that will mean handing power to Tory-run Edgbaston and Sutton Coldfield and Liberal Democrat Yardley. Will the Labour group stand for it?

Service Birmingham. Labour councillors have toned down their gung-ho approach to the council’s private ICT providers having, presumably, taken on board the probable cost of getting out of contracts worth £1 billion. A review into how to cut Service Birmingham costs is underway. Both sides have reasons to reach a compromise.

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