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Birmingham demands crisis talks with Eric Pickles

Birmingham demands crisis talks with Eric Pickles

🕔20.Dec 2012

Birmingham has joined forces with six other major cities in an effort to persuade Local Government Secretary Eric Pickles to re-think his “unfair” public spending cuts strategy.

City council leader Sir Albert Bore and the leaders of Liverpool, Manchester, Nottingham, Sheffield, Newcastle and Leeds have written to Mr Pickles demanding an urgent meeting and warning of a “looming financial crisis in the nation’s largest cities”.

They also warn that the Government’s austerity measures will inflict lasting harm on councils as drivers of regional economies.

Mr Pickles’s financial settlement for local councils, announced to MPs yesterday, will see Birmingham’s spending power fall by about seven per cent over the next two years as Government cuts beginn to bite.

The council estimates it will lose £310 million in grant between 2011 and 2017, and says it has to identify £600 million in budget cuts during that period. As many as 7,000 Birmingham council jobs could disappear over the six years.

In their letter, the council leaders warn Mr Pickles that his assault on local government spending will mean that local authorities will only be able to afford to provide social services and refuse collection by the end of the decade. All other town hall services will disappear.

Here is an edited version of the letter:

“As leaders of English core cities we are writing to request that you meet with us urgently to discuss the very real difficulties for local public services that are now being created by cuts in central government funding. These now amount to a looming financial crisis in the nation’s largest cities.

“To be clear from the outset, none of us is under any illusion about the need for spending reductions and the potential for efficiency savings. But the cuts we are now being asked to make in the years ahead will go far beyond the level at which we can protect vital local services. Many non-statutory services that improve the quality of life and provide real economic value are already at risk of disappearing in the next two years as we try to prioritise statutory services for the most vulnerable.

“Each of our councils has made significant cuts in spending in the last two years and been diligent and innovative in finding new ways of working: In Birmingham, savings of £275m have already been made, including a 25 per cent reduction in staffing accompanied by a radical business transformation programme.

“The reductions in grant have been unfairly distributed from the start, with the most deprived parts of the country facing the largest cuts, as has already been amply demonstrated. In Wokingham they faced a very manageable 0.6 per cent cut in 2011-12.

“In Windsor and Maidenhead the figure was 1.1 per cent, whilst in most of the large cities and the most deprived London boroughs it was over 8 per cent. Research by Newcastle City Council showed that the cities and some London boroughs have seen total cuts almost ten times those of rural authorities in the south of England.

“The percentage cut for some of the most deprived areas is double the average across the country. It has become clear that amongst the worst hit areas are the core cities and our city regions, where we are facing some of the most intense pressures on services and where the sheer scale of the cuts will be most apparent.

“The cuts have also been unfairly distributed across Whitehall and between local and central government, with no other department facing anything like the level of reduction that local government as a whole and the big cities in particular are having to deal with.

“The Chancellor’s announcement this month of a further two per cent cut in 2014-15 and the likelihood of further huge reductions in 2015-17 may be the straw that breaks the camel’s back.

“Combined with unprecedented spending pressures, particularly in the social care services, the cuts we now anticipate will leave us unable to provide anything like the range or quality of public services we believe our citizens have a right to expect.

“The ‘Graph of Doom’ can be replicated in each of our cities and shows that – if current plans are not changed – there will be no money for anything but social care and refuse collection later in this decade.

“We are now planning for the following cuts and spending pressures:

  • In Birmingham there is an estimated gap of £600m between funding and spending pressures between 2011 and 2017 – a 50% reduction in the controllable budget of £1.2bn – with £110m of cuts in 2013-14.
  • Liverpool anticipates a further budget gap of £143m from its £480m by 2017 (a 30% reduction on top of a similar reduction in 2011-13), including £32m in 2013-14.
  • Newcastle is facing an estimated £90m funding gap over the three years to 2016, within a starting budget of £267m (a 34% reduction in that period), with £38m in 2013-14.
  • Manchester is facing an estimated £80m funding gap over the next 2 years and is set to lose up to 900 further staff. 2015/16 will undoubtedly see further savings once the new CSR numbers become clear.
  • For Sheffield it is forecast that the potential revenue gap for 2013/14 will be in the region of £50m and cumulative gap by 2017/18 will be about £116m.
  • Leeds is estimating that they will need to make a further £140m savings by 2017, including £51m in 2013-14.

“The Government has rightly recognised that the core cities hold the key to Britain’s future economic growth and prosperity. We have worked well together to complete our city deals and now look forward to further radical change in the light of the Heseltine review.

“But it makes no sense to invest in economic development and infrastructure whilst at the same time the basic services upon which our cities depend are being systematically under-funded. Our cities must be socially sustainable if they are to succeed economically.

“As the LGA has shown, local government plays a key role in supporting economic growth through its mainstream services and expenditure. Excessive cuts in local services are also counterproductive as they will have consequences in terms of spending pressures on central government departments.

“We want to engage in a genuine and honest dialogue about how to restructure the funding system and implement reforms such as community budgets and we would urge you to take that forward without delay. But right now we are seeking an urgent meeting as you announce next year’s settlement so that we can find ways of averting the worst of the damage that might otherwise be inflicted next year.

“We are sure that you will take these concerns seriously and that the Government will want to avoid the worst consequences of the emerging financial crisis in our cities. So, on behalf of the 3.7m people of our cities, we look forward to your early reply in anticipation of a positive response to this request.

Yours Sincerely,

Mayor Joe Anderson, Mayor of Liverpool

Sir Albert Bore, Leader of Birmingham City Council

Cllr Jon Collins, Leader of Nottingham City Council

Cllr Julie Dore, Leader of Sheffield City Council

Cllr Nick Forbes, Leader of Newcastle City Council

Sir Richard Leese, Leader of Manchester City Council

Cllr Keith Wakefield, Leader of Leeds City Council


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