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Bore’s zero-based budget to ‘redefine role of local government’

Bore’s zero-based budget to ‘redefine role of local government’

🕔12.Jun 2013

Birmingham City Council will change the way it operates beyond recognition as it responds to a financial crisis by ripping up all existing spending plans and starting again from scratch.

Labour council leader Sir Albert Bore has embarked on a zero-based budgeting exercise, warning colleagues that the only workable option to address Government-imposed grant cuts and soaring demand for social care is to work from “a clean sheet of paper”.

It’s the reverse of the usual approach to these matters, which traditionally involves deciding how best to slash departmental budgets in order to meet the money available and then continuing to deliver pared-down services across the board.

This time Birmingham will start from scratch by deciding first which services the council simply has to provide, and then approving budgets accordingly.

In an attempt to prepare the Labour group for some pretty unpalatable decisions, Sir Albert has spoken about redefining the role of local government with “a logical inevitability” that this will mean radical structural change, the axing or merging of some council departments, substantial job losses and either an end to many of the public services most of us take for granted transferring these to other providers.

He has said he wants to re-shape the council so that it is ‘tailor made for the services that we are going to deliver in the future”.

The clear message is that the drawbridge is being hoisted and that Birmingham City Council will have to redefine its role by only spending money on carefully defined priorities:

  • Protecting the vulnerable.
  • Making Birmingham the enterprise capital of Britain.
  • Devolving power to local communities.

Sir Albert claims that no other council is approaching the budgeting process in such a radical way.

Birmingham’s approach is being driven by a toxic combination of cuts in government grant and relentless demand for adult social services, leaving the council with a £615 million shortfall by 2016-17. Put simply, the council has to cut spending by half over a seven year period.

Sir Albert has been setting the scene for the 2014-15 budget process for some time now.

He has spoken of “the end of local government as we know it”, has insisted there can be no more “salami slicing” of departmental budgets, and has set up a series of reviews looking at all services provided by the council and, crucially, whether these services need to be provided at all by the public sector.

Of course, council leaders have been insisting for 20 years or more that the salami slicing approach to cutting spending has to end. On this occasion, it really will have to end in Birmingham because the scale of financial savings the council has to come up with couldn’t be found by simply telling every department to cut spending by a predefined percentage.

The council has begun the process of what Sir Albert likes to call a “dialogue” with Birmingham, asking people, groups and organisations a series of questions about priorities in these difficult times. A number of green papers setting out proposals for adult care, education services, leisure services and council support services will be published shortly.

The type of questions being posed by the Labour leadership are expected to include a section on what services the council should stop delivering, asking:

  • Does the activity serve a public interest?
  • If so, should the service be provided by local government?
  • Which council services could be transferred to the private or voluntary sector?
  • Which services should be abandoned completely?

Options for reducing spending could include:

  • Getting more out of existing resources by applying new technologies and improving management. Reducing waste.
  • Moving service delivery to a private or voluntary sector provider, co-operative or trust.
  • Reducing demand for services by working with communities to encourage people to make their own contribution.
  • Stop providing services. Rely on the private sector to step in.

Radical options for changing the way the council operates are on the table, with a stark warning that the public sector in Birmingham has in many respects changed little since Victorian times in the way it goes about deciding which services it thinks people need and then delivering them.

The principle of universal services is up for debate, with the probability of a move towards ending free public provision for all regardless of need or the ability to pay. Instead, those deemed to be most in need may be handed a “personal budget” by the council and told to buy the service themselves.

One of the biggest ideas underpinning Sir Albert’s approach can be summed up by the words “active citizenship”, effectively encouraging neighbourhood groups and community volunteers to get involved in delivering a range of services. This could include sweeping the streets, maintaining public land and grass verges, helping to run leisure centres and community libraries, thereby saving the council wage costs.

It is absolutely clear that one result of a shift from public provision to reliance on the private and voluntary sectors will be further downsizing of the council as Birmingham’s major employer. Staffing levels are already down to about 15,000 from a high of more than 25,000, but the type of structural change envisaged by Sir Albert is likely to result in yet more job losses.

The council leader is clear that a “silo mentality” pitting department against department must end. Part of the attraction of devolving service delivery to, say, neighbourhood offices is that barriers between social services, housing and education can be broken down. One or two officials could deal with all of these issues, rather than six or seven.

In fact, one of the most contentious parts of Sir Albert’s dialogue, particularly from a trade union point of view, is likely to be a section on integration setting out the case for ending a culture where departments operate separately each doing what it sees as its own job.

Just like salami slicing, council leaders have promised to end silo mentality for years but have rarely succeeded in doing so. Sir Albert’s devolution programme, handing down budgets and powers to district committees, provides a once in a generation opportunity for positive structural change.

It is proposed instead to join services up to focus on a local area and institute “more radical ways of working” for council staff. The logical inevitability of this, as Sir Albert has warned councillors, is huge changes in the way the council goes about its business and, certainly, reducing the size of the workforce and quite possibly the number of directorates and chief officers.

And as if all of this were not enough to be going on with, there are one or two very large elephants lurking in the corner of the Council House.

  • The future organisation of refuse collection. There can be little doubt when the wheelie bin experiment has settled down that the pressure to save money by switching to fortnightly collection of household waste will be too great to turn down. This can’t be done until 2018 under the terms of the Government grant for wheelie bins, but there seems to be some inevitability about the outcome, as well as the likelihood of contracting out the service.
  • The relentless shift of schools to academy status is set to continue. Will Birmingham City Council actually require an education department by 2018?
  • The future of non-core services. Can it be sensible for the council to continue owning the NEC and part-owning Birmingham Airport at a time when public services are being dismantled or hived off? How does conferencing and aviation fit into Sir Albert’s priorities for future council expenditure?
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