Cabinet meets to face financial facts
Birmingham city council’s cabinet meets this morning with the latest budget monitoring report top of the agenda as the local authority awaits the second report of the LGA’s independent financial review team.
The latest budget report covers the period to the end of November 2016, just days before the council published its budget for 2017-18 on which consultation closed last week. The report states that there will be “combined pressures and undeliverable savings of £37M at year end.” It adds: “given the extent of the budget challenge, it should be recognised that the Council will have a substantial service overspend despite its ongoing efforts to mitigate this position.”
The People Directorate is the worst offender, forecasting an overspend of £53.5M. The increase of £8.4M since Month 6 includes increased demand for Adult Care Packages and revised expectations of initiatives to reduce service commitments and the revised assessment of Travel Assist costs.
Leader of the Conservative Group Councillor Robert Alden (Erdington) said:
The Labour Council has lost complete control of it’s budget rather than trying to pull it back together we have seen the budgetary black hole growing month on month. For the Council to have overspent it’s own planned budget by over £69m is truly astonishing and shows just how out of it’s depth the administration has become.
The Conservative Group says that the Council’s overall budget position is helped by a number of items that owe more to luck than any planning on the Council behalf, continued low interest rates mean the Council saved £13M on planned interest repayments, an extra one off dividend from the airport and receipts from advanced sales of property and assets.
Cllr Alden continued:
The Council is projecting an end year overspend of £37M once these one off bonuses are accounted for. This means additional savings the Council will need to make next year to cover the failures of the administration this year.
However who could really trust them to balance the budget next year after the mess created this year. It is quite astonishing that a budget decided agreed and implemented by the Labour administration can have been allowed to get so out of hand by themselves. If they set the budget surely they must have thought they could meet it at the start of the year, this is just irresponsible behavior [sic] by them.
This £69M overspend is once again proof that you cant [sic] trust Labour to run the City’s finances.
Also on the agenda is the proposed model for transferring children’s social care to an independent trust.
Brigid Jones, Cabinet Member for Children, Families and Schools, is proposing a Community Interest Company (CIC) model for the wholly owned company that would take over running children’s services.
Costs have been estimated at £7.5M in 2016/17 and 2017/18 to support necessary work to design, develop and set up the Trust model which will be met by Government. The report states that work is being undertaken to calculate and disaggregate the costs of support services across the Council to identify those that would transfer into or be provided to the Trust.
The report to Cabinet states:
As a local authority in intervention and subject to direction from the Secretary of State the current Children’s Commissioner relationship would continue whilst the Trust is developed and implemented and the DfE would continue to hold the Council to account for improvements in delivery and outcomes.
The Council would remain accountable for the welfare and wellbeing of children and young people and for improving outcomes. Through a contract with the Council the Trust would be responsible for determining how those outcomes of most relevance to its work are achieved and also for the day-to-day running of children’s services.
The contract would include DfE third party rights whilst the local authority remains in intervention… The Council would continue to hold the statutory remits of the Director of Children’s Services…and Lead Member for children’s services… and the Council would be the body held accountable by Ofsted.
The Birmingham Safeguarding Children Board would retain its role in ensuring the effectiveness of co-operation between agencies in safeguarding and promoting the welfare of children and young people.
Ms Jones commented:
We want all our children to have a fantastic childhood, and every option has been considered as to how to shape our social work in the future to deliver just that.
It has been recommended that on balance a wholly-owned company (WOC) is the best model for our trust as it provides more flexibility and a low risk; there will be far less potential for disruption to our on-going improvement than with other options.
It is also recommended that it is created as a community interest company, which is really important as it makes clear the Trust exists to deliver real and tangible benefits to the community it serves, and not for private gain.
The Trust will have its own board and management team to ensure operational independence and a single focus on children’s care, and we will look to build in strong staff engagement including a role in governance arrangements.
The next step in the process (if approved by cabinet) is that a shadow Trust will start running from April this year to ensure that everything that needs to be in place when the full Trust begins work, is actually in place and that the Trust can work fully from day one.
There is a long way still to go, but this is a really important step for us. Ultimately, it is about creating conditions that allow our best social workers, with our partners, children and families, to do great work.
The report preferred the wholly owned model, via a CIC, to a employee-owned mutual. A Chair Designate of the Trust is in place and a Chief Executive will be recruited by April if Cabinet backs the proposal today. A further report will be presented in July.
Given the continuing budget challenges in his directorate and the creation of a new company to help resolve performance, Council House eyes will be on Strategic Director for People, Peter Hay.
Cabinet will also consider a report of an Adult Social Care Peer Challenge team led by Linda Sanders, Strategic Director – People, City of Wolverhampton Council.
Ms Sanders says in her letter summarising the team’s feedback to Mr Hay:
There were many positive areas of good practice and policy that we will take away from our visit and in particular the commitment and enthusiasm of staff at all levels in the organisation to provide great care for the citizens of Birmingham.
The report goes onto highlight six areas requiring attention, led by getting a “grip” on financial management:
- strengthen your grip on the financial monitoring and delivery of efficiencies/ savings requirement
- strengthen the relationship between the commissioning for excellence unit & with your delivery of frontline services and improve their engagement with stakeholders including carers
- increase the pace and scale of transformation required by the Maximising Independence Programme to have a much stronger focus on the delivery of improved outcomes for service users
- translate your initial thinking into a credible vision for an integrated place based health and care system in Birmingham and outline how relationships with health can be improved at the front door
- upscale and maximise the potential offered by an asset based approach with the voluntary and community sector to transform your traditional Social work model placing a particular emphasis on your narrative and your actions in relation to prevention
- strengthen the interface between adult social care and the corporate centre to realise the ambition for Birmingham to become “a city that cares” and a great city to grow old in.
Staff and trades unions have been consulted on the children’s services proposals. It is anticipated Council staff will transfer to the CIC under TUPE (Transfer of Undertakings [Protection of Employment]) regulations.
Meanwhile, Chamberlain Files understands staff so far identified ‘at risk’ of redundancy under Council plans for a new “Forward Operating Model” have been issued with the relevant notices. However, Council House insiders remain unconvinced the multi-million savings plan can be delivered on time.
This proposal…will require savings of almost £10M in 2017/18 and £40M in 2018/19. It represents major organisational change and will require detailed structural and process review, extensive staff and Trade Union consultation, and significant reductions in staff numbers through either voluntary or compulsory means.
Given the stage the Council has reached in its consideration of this proposal, it would appear optimistic to achieve all of these savings as planned. The Council should continue its work to establish a detailed implementation plan and reflect this in its budget plans accordingly.
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