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Council budget £68m in red as ‘social care crisis plays out in Birmingham’

Council budget £68m in red as ‘social care crisis plays out in Birmingham’

🕔27.Jul 2016

A £68 million hole has opened up in Birmingham city council’s accounts, driven largely by the sharply escalating cost of providing adult social care.

The projected huge gap between the 2016-17 revenue budget and actual spending has been described as an “exceptional challenge” by council leaders and officials who are holding fortnightly monitoring meetings in an attempt to sort out the financial mess.

It is not unusual for budget shortfall to occur but the scale of this one, identified just two months into the financial year, is unusual. It represents just under ten per cent of the entire budget and leaves council leader John Clancy scrabbling to put the finances back on course before the Birmingham Independent Improvement Panel meets again in October to report to the Government on the city’s progress.

Problems have been exacerbated by a failure to deliver £35 million of planned cross-departmental savings in 2015-16, before Cllr Clancy became leader, on top of £52 million outstanding for this year, leaving a total of £123 million in savings to be found during the rest of 2016-17.

The bulk of £45 million of savings where actions are not yet in place to realise them lies with the People directorate which provides social care for adults and children.

Peter Hay, strategic director for People, who will have to come up with ways of delivering the planned savings before the end of the financial year, told a cabinet meeting there is “a social care crisis being played out in this city”.

The numbers of funded adults receiving care services has increased by 14 per cent over the past three years with a sharp jump in numbers and costs of younger adult packages, particularly those with learning disabilities.

A £1.8 million gap exists between the amount of money available for adult social care packages and the forecast commitment based on demand.

Plans to save £2.5 million a year by scaling back home to school transport are running £1.4 million behind schedule, while moves to raise money by selling playing fields for housing are beset by legal difficulties.

Birmingham is by no means alone in facing severe difficulty in funding the cost of social care, but the size of the city makes the financial projections larger.

The city council has already seen its budgets squeezed at unprecedented levels, delivering about £500 million in savings since 2010 and a further £250 million predicted to be found by 2020.

The savings reflect two factors – cuts in grant due to the Government’s austerity programme, and the need to identify additional income to meet increasing demand for adults and children’s social services.

The People directorate alone must cut costs by £120 million by 2020, with half of the cash to be found through closer working and shared budgets with the NHS.

Deputy council leader Ian Ward told a cabinet meeting that Birmingham faced “exceptionally challenging” difficulties in balancing the books. Cllr Ward added:

I want to reassure everyone that this is being taken very seriously by the council and senior officers. There will be fortnightly meetings to oversee the People directorate.

We are facing a very difficult challenge and it is becoming more and more difficult to deliver the required savings that the Government wants on an annual basis.

The next few months are likely to pose a number of harsh decisions for the controlling Labour group as the council begins to put together the 2017-18 budget, not just in the area of social services but other spending including community libraries where a new operating model is being drawn up to save £1.8 million a year from next April.

The cabinet has approved the first steps towards transferring children’s social care to a voluntary trust, a move that may result in the council losing overall control of the department.

Other cost savings undelivered and spending pressures include:

  • Coping with the rise in the number of homeless people, £2.9m shortfall.
  • Younger adults day care, £700,000 savings at risk.
  • Expected £8.4 million grant from the Better Care Fund now at risk.
  • Delays in delivering a new operational model for community libraries, £1m.
  • Delays in a plan to hand Alexander Stadium over to new operators, £1m.

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