Council finances: museum magic or budget black holes?
Today’s Birmingham city council cabinet meeting will consider the draft financial plan for 2017 before it goes for full city council approval in two weeks, with claims the Labour administration has saved the Museums, reduced cuts to Parks and halted plans to cut post-16 travel.
The council says its consultation on the budget saw over 3,000 people respond and around 100,000 people engaged. According to the Council House, changes to its original budget plan include:
- reducing the proposed cuts by £7.5M, by using the £2.9M from the 1% extra the social care precept bringing and an additional £4.6M in new sources of revenue
- reducing cuts to Supporting People to £3.2M and Parks to £1.2M
- not making the proposed 2017/18 £750k cuts the Museums
- halting the proposed cuts to Post-16 travel budget
- £6.2M more in Adult Social Care and £2M more in Travel Assist.
Councillor John Clancy, the leader of Birmingham city council, said:
This has been the most difficult budget-making process Birmingham City Council has faced. We have cut spending by almost £600 million since 2010 and expect to make a further £170 million savings by 2021. There are no easy decisions to be made after seven years of Government-imposed austerity.
We have engaged and consulted with more citizens than ever before because we were determined to make sure as many people as possible had a chance to comment on our spending proposals, at public meetings, through social media, and by writing to us.
I’d like to thank everyone who took the time to have their say. We have listened to the concerns raised in the consultation process and we’ve responded by making significant changes to our initial spending plans, reducing a forecast £78 million cut to £70 million.
After taking account of changes in grant funding, income from Business Rates and Council Tax, total corporate funding will increase by £11.3M (1.3%) in comparison with 2016/17 on a cash basis. (£2.6M increase in real terms).
At the same time, there is the need to increase funding for some services by £109.8M….This includes investing over £50M in adult social care…further resources for child protection services (an extra £2.3M) and homelessness services (£3.0M) are also being provided.
…inflationary costs are estimated to be £10.3M, there is a strategic use of reserves of £40.5M, a further net contribution/repayment to reserves of £8.4M and a reduction in corporately managed budgets of £10.8M.
… it will be necessary for further savings of £70.9M to be made in order to balance the revenue budget in 2017/18; this figure grows to £171.4m by 2020/21. Savings at this level will mean that total savings of around £760M will have had to be made over the period from 2010/11 to 2020/21.
A balance of £57.3M will also be retained in the Organisational Transition Reserve (OTR) to provide further risk contingency.
The Council budget is based on a Council tax increase of 4.99%, including a 3% social care precept. The budget is subject to the final version of the Government Local Government Finance Settlement, which is not due until the end of February.
Cllr Clancy continued:
We are proposing to halve the cuts we were planning to make in the Supporting People budget in 2018-19 and significantly reduce planned cuts in 2017-18 so that we can better protect vulnerable and older citizens. We’ve taken on board the huge importance Brummies rightly place on parks and museums.
After careful consideration we are proposing to halve the new savings proposals planned for parks and remove entirely the cuts proposed in 2017-18 for the Birmingham Museums Trust. We are proposing to put £750,000 back into the museums trust budget.
We are also planning to put back into our spending plans £2 million to help meet the travel needs of children from low income families or with special educational needs, and we plan to invest £6.2 million more in adult social care for 2017-18.
Overall, the Council’s consultation exercise received over 3,000 responses. The total increase to Council tax was not supported by the majority. There was particularly vocal opposition to budget cuts including Parks, Museums and parts of Supporting People such as helping vulnerable and homeless people.
The Conservative group says Labour’s Council budget will “actually increase by £11.3M for 2017/18 but Council still to take £1m funding from Museum and to look at charging for admission.”
It says this budget is also £26M more then Labour forecast for 2017/18 in the 2016+ budget so “any savings the Council makes are down to pressures, investments and a failure to deliver previous savings, not cuts.”
The Conservative Group also says that as well as taking the extra 1% social care precept option, the Labour administration is also releasing more revenue by borrowing to pay three year pension contributions upfront and repaying over a longer term.
The Museum’s Trust was reported as being ‘saved’ from a £500k cut, but the Conservatives say this is “just a rephrasing of the cut for implementation so it will still be removed from the Council budget just one year later than they currently planned.”
Leader of the Conservative Group Councillor Robert Alden said:
With a budget that is actually increasing by £11.6M this year the Council should not have had to make these savings. Sadly Birmingham residents are now paying the price for a Labour administration that has lost control of the budget. £67M overspend in directorates this year is leading the Council to having to make savings despite its budget increasing.
Worse of all the savings they are making are to frontline vital services not from the back office. They don’t have to run our City down like this but Labour have proven themselves incapable of running the City properly, instead leaving a huge black hole in the Council finances. No wonder they have had 10 different external investigations and monitoring reports carried out into their failings so far and counting.
While despite announcing that savings for the Museum would be scrapped last week the published report reveals that in fact from 2018 Labour will cut £1M a year from the Museum budget (page 103 of Financial Plan 2017+) and will be considering introducing charges in future years.
Cllr Alden concluded:
The City Council have treated the Museums with contempt. To announce one week that grants are being protected and then the following week slip out that in fact £1M a year will still be taken by the Council is a disgrace. Now Birmingham residents could be charged to visit the museum due to the Council’s financial mismanagement. No wonder more and more Brummies are saying its time for a change of Council in Birmingham.
Chamberlain Files understands that the LibDem group will also point to “neat financial adjustments” in the budget and business plan, with money being found and savings being delayed. It is also likely to point to the extra money being spent in waste services, rather than savings being generated from privatisation.
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