Council budget: a tale of empty assurances and undeliverable savings
Anyone thinking the departure of Sir Albert Bore, the installation of his perennial challenger Cllr Clancy and an extended summer break for the panel set up to oversee the implementation of Lord Kerslake’s recommendations was an end to any threat hanging over the largest metropolitan authority in the land will have had a rude awakening at just after midnight.
Arguably, political developments on the other side of the pond may have been responsible for even worse nightmares just hours later.
The letter published today by the Birmingham Independent Improvement Panel (BIIP) is by no means a casual note to the Government to tell them it’s ‘all going very well’. Neither is it a request for the panel to disband and let Cllr Clancy and his chief executive get on with their jobs unhindered. They’re going nowhere.
The second paragraph of John Crabtree’s letter to the Communities Secretary makes it abundantly clear:
We report that flawed planning and insufficient delivery of the Council’s 2016/17 revenue budget will result in a serious overspend for the year. As a consequence, the Council faces a mammoth task to prepare a balanced budget for 2017/18 and, as the Council has very limited reserves, this potentially places at risk its future success.
The letter continues:
The Council understands that long-term financial stability will only be achieved by delivering a highly ambitious transformation agenda. If this is to be successful the Council must simultaneously make significant savings, invest in new ways of operating and develop an organisational culture that is fit for purpose.
The letter notes that political and administrative progress had been reported in its March update to the Communities Secretary. But it says it also then reported:
We considered that the delivery of the Council’s four-year financial strategy would be extremely challenging. Given the transformational nature of the key proposals for budget reduction we said that it would be a serious test of the Council’s political and managerial leadership to deliver its financial plans successfully.
We reported that the chief executive and corporate leadership team had given an assurance that they would provide strong corporate leadership to ensure delivery of the Council’s improvement priorities – as set out in its published ‘Gap Analysis’ – and the Council’s financial plan. In the light of the assurances received it was agreed that the Panel would review progress in the Autumn.
That serious test has, so far, not been met and the Panel is clearly having second thoughts about the confidence it placed in the Council after assurances were given.
There are those now, inside and outside the Council, wondering whether giving the political and managerial leadership some space to make progress was the right call.
There is praise for much of the progress made in the letter sent to Sajid Javid, including better collaborative and partnership working.
Chamberlain Files understands that, though previous Communities Secretary Greg Clark took a hands on role in dealing with the Panel and took a close interest in developments, the current Communities Secretary has adopted more of a back seat approach.
The Panel also points out that progress in many areas cannot be evidenced. The letter says:
But many partners report that they have yet to see the impact demonstrated in improved collaboration for some areas of the Council’s operations or the deep and wide staff engagement that is needed to make the Council a good partner.
More strategic focus, addressing slow progress, moving away from silo working, removing “ruthlessly challenging bureaucracy” and improving staff empowerment and confidence are all highlighted as major issues.
Mr Crabtree tells the Secretary of State:
The delays in driving radical shifts in how the Council operates has impacted on the development and implementation of credible plans for dealing with the Council’s serious financial position which remains the key concern for the panel.
On the financial position, the Panel comes to a stark finding:
The Council has now acknowledged that a significant number of the budget reduction proposals recommended to the Budget Council meeting in March 2016 were unrealistic and previously undeliverable proposals were carried forward into the 2016/17 budget. There was insufficient understanding and ownership of the Council’s 2016/17 budget…
But the final line of the same paragraph in the letter strikes a particularly strong blow:
This is despite the Panel in late 2015 and early 2016 clearly bringing to the attention of the Chief Executive and corporate leadership team its concerns about, and the risks associated with, many of these matters.
With the Council needing to access its reserves for the current year, it will make the challenging task of delivering a balanced budget next year even harder. Mr Crabtree concludes:
This represents a mammoth task for the Council, to be achieved over a very short timescale.
The Panel reports the Council is seeking to “grip” the situation. The letter to the Communities Secretary says the Council is seeking to appoint a Chief Operating Officer to “provide extra senior management capacity.”
Chamberlain Files understands that the COO will take full responsibility for financial management, effectively leaving the Chief Executive to focus on other parts of the agenda. Senior council officers, including in finance, are likely to be leaving the council soon. However, Chamberlain Files further understands a job specification and recruitment process are not yet in place for the new COO.
Meanwhile, Cllr Clancy continues to support Mark Rogers in the face of challenging scrutiny from the Improvement Panel.
The Panel and the Council will now jointly commission independent reviews of 2017/18 budget deliverability and long term financial plans.
BIIP says it recognises that the Council faces huge challenges in coping with the costs and rising demand for adult social care and other priorities including plans for a Children’s Trust. However, it is clear that the Panel was not impressed with the Council’s mistaken belief that it could deliver early budgetary benefits from plans to work more closely with the health service.
On organisational culture, partnership working and financial management, it is clear the panel believes the Council has some distance to travel. Given the even more challenging budget horizon for 2017/18 and beyond, the question now is how politicians and officers will speed up reform and make even tougher budget calls.
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