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Council warned it faces ‘mammoth task’ to balance budget

Council warned it faces ‘mammoth task’ to balance budget

🕔09.Nov 2016

Birmingham city council has been issued with a serious warning about its ability to deliver a balanced budget next year.

The Birmingham Independent Improvement Panel (BIIP) is today publishing a letter to the Secretary of State for Communities and Local Government, reporting on the progress that the council has made in implementing the recommendations of the Kerslake Report in the twenty-one months since the report’s publication.

The Panel’s letter is published alongside the Council’s own self-assessment of its progress Strengthening the Foundations.

Whilst reporting on the positive aspects of the Council’s progress in continuing to implement its improvement plans in the period April to October 2016, its core purpose is to set out serious concerns about the slow pace of change in the Council’s organisational culture  and  financial management.

The Panel draws attention to the Council’s serious overspend for 2016/17, estimated to be around £49m, that results from flawed planning and insufficient delivery of the Council’s revenue budget for the year. Consequently, the Council faces a “mammoth task” to prepare a balanced budget for 2017/18. With very limited general reserves available, this potentially places at risk its future success says the Panel.

READ FILES ANALYSIS: a tale of empty assurances and undeliverable savings.

Commenting on the Panel’s report to the Secretary of State the Chair of the Panel, John Crabtree, said:

Our discussions with the Leader, Cabinet Members and Chief Executive have demonstrated that they are actively engaged in joint working to understand and grip the full challenge now facing the Council, and to identify and consult on the measures needed to bridge the very substantial financial gap for 2017/18.

Given the need for the Council to have absolute confidence in the deliverability of the 2017/18 revenue budget when asked to approve it in March 2017, we have agreed with the Council to jointly commission an independent review of the 2017/18 budget.

The review will have a particular focus on the quality and robustness of the Council’s delivery plans for 2017/18 across all areas of expenditure.

The letter makes clear that the Panel is concerned about the impact that tackling the financial concerns could have on the Council’s future improvement. It emphasises that the Council must continue to maintain its focus on the very important improvement programmes relating to education and children’s social care, including the development of plans for a Children’s Trust.

The Panel will report again to the Communities Secretary on the Council’s progress and particularly in relation to the setting of the Council’s 2017/18 budget in March 2017.

Birmingham City Council issued a response to the latest BIIP letter. Strangely, it takes until paragraph five before the the council leader touches on the central issue of financial management, instead preferring to feature the positive aspects of the Panel’s letter.

The leader of the council, Councillor John Clancy, said:

I welcome the panel’s acknowledgement, just two years into a five-year improvement programme, that Birmingham City Council has already made considerable progress.

As the panel correctly notes, the ‘new skills, insights and contributions’ from additional senior management staff have made a positive difference and the council ‘has made progress in addressing many of its own improvement priorities and handled effectively some unexpected external events and challenges’.

The panel’s acceptance that the council is actively addressing concerns raised by the Kerslake Review and is strengthening how it manages its corporate performance by putting in place improved collaborative working between elected members and officers is also welcomed.

I am particularly pleased that the panel is fully supportive of my decision to appoint four assistant council leaders who are leading a drive towards greater devolution and developing new ways of involving and listening to the views of citizens’.

The panel is correct to recognise the extent of the extremely challenging circumstances facing the council as it focuses on developing a robust medium-term financial strategy – a challenge made all the more difficult by year-on-year cuts to Government grant allocations.

As I have said before, I very much welcome the panel’s continuing input as Birmingham City Council’s critical friend, monitoring our progress and providing expert help where necessary. I regard myself as the fifth member of the panel and remain intensely focused on working with the panel chair and members to make Birmingham a better place for all its citizens.

The Conservative Group “slammed” the Labour Council for its “abject failure to manage it’s budget properly leading to a serious overspend for 2016/17, estimated to be around £49m, that results from flawed planning and insufficient delivery of the Council’s revenue budget for the year”.

Cllr Robert Alden (Con, Erdington) leader of the Conservative Group said:

For the ruling administration to be told that they had flawed planning and insufficient delivery of their budget is damning and astonishing. Here we have a Labour leader in Cllr John Clancy who took over from the previous Labour leader on the back of claiming he could better manage the Council budget and get the improvement panel out of Birmingham. Instead we see the Council with a massive overspend which is entirely it’s own fault for bad management and the improvement panel having to stay until at least March 2017.

Cllr Alden added:

Labour have demonstrated that they simply cannot be trusted with the Council’s finances and now an independent review of it’s financial plans to check the robustness and quality of delivery plans for the 2017/18 budget, reporting to the panel.

It is unprecedented for the Labour administration to be told ‘there was insufficient understanding and ownership of the Council’s 2016/17 budget and a lack of comprehensive and robust delivery plans for the budget’ when you combine that with the Labour Council have had to admit to the Improvement Panel that a significant number of the budget reduction proposals ‘were unrealistic and many undeliverable proposals were carried forward’ it is once again proof how much the Council are letting down taxpayers of our City.

The Conservative Group leader concluded:

The Council is now having to make cuts to services which it would never would have had to if it had just managed the budget properly to start with. Many of the savings the Council have disguarded were not even difficult to achieve; getting staff to switch off lights at night, better managing the heating in offices, would deliver huge savings and yet the Council gave up trying to manage the energy bills in the first month of the financial year. It is frankly gross negligence to have put a budget to the Council which they now admit was totally undeliverable. Birmingham deserves better, Birmingham needs a change in Council.

Arguably, chief executive Mark Rogers is under more pressure than the political leader following BIIP’s latest update. Upon his election, Cllr Clancy made clear that the chief executive would be left to run the council organisation in a break from the micromanagement of Sir Albert Bore. Mr Rogers said:

My team and I take the comments made by the Improvement Panel very seriously. We are pleased that the progress we have made in many areas has been recognised.

The continuing and profound reductions to local government funding mean that the budget setting process has become increasingly challenging. The Panel is correct in describing the setting of the 2017/18 budget as a ‘mammoth task’ and it is one that we are not going to shy away from.

We are equally determined to continue the wider work to improve ourselves and will not lose sight of our responsibilities to improve safeguarding and education services.

These are the toughest of times ahead, but I have a strong team with me who as are committed as I am about delivering positive change for Birmingham.

Challenge during these times is always welcome, and helps us to focus even harder on delivering the services and support, with partners, for Birmingham citizens.

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