The Chamberlain News

Council budget ‘black hole’ £21.3 million, and growing

The boast that Birmingham City Council’s former Tory-Liberal Democrat coalition stood for fiscal discipline is under challenge following a claim that it ran up a potential £21million budget deficit before leaving office.

A finance monitoring report produced by the city’s new Labour administration shows that the Progressive Partnership approved spending cuts of £113 million, but failed to deliver £15.6 million of the required savings.

The coalition, which controlled the council from 2004 to May this year, also made no provision to meet new spending pressures amounting to £5.6 million, according to the report.

By the beginning of June, just two months into 2012-13, council finance directors were warning of a £21.328 million deficit by the end of the financial year – equivalent to two per cent of the budget. The gap is likely to have widened since then.

Details of the shortfall emerged in a written report for the next cabinet meeting.

Sir Albert Bore, Labour council leader, has warned that the “black hole” is likely to grow and that his new administration will have to take difficult spending decisions.

Conservative and Liberal Democrat councillors have accused Sir Albert of “muddying the waters” by trying to unfairly blame the coalition for spending cuts that Labour will have to make.

Former Tory council leader Mike Whitby pointed out that the coalition inherited a far larger £30 million budget deficit from Labour in 2004.

Coun Whitby hit back in an attempt to defend his administration’s “fiscal credibility” and said he would be happy to resume control of council finances if the pressure on Labour was “beginning to bite”.

He said: “It is with a wry smile that I notice Labour use the term ‘black hole’. It is a pity and very sad that the Labour government left a massive hole in the national finances, and indebted future generations for decades to come.

“However, here in Birmingham over the last eight years, we have a record of balancing our budget, keeping council tax low, directing extra funding over the lifetime of our administration to the caring services, and ultimately increasing satisfaction levels to their highest for some time.

“Casting our minds back to 2004 when we took over, we had to manage an immediate £32m ‘black hole’ – which we did manage, whilst at the year end, balancing the budget. My budget declared in February 2012 was accepted as financially sound and viable by the Section 151 Officer, and clearly predicted difficult times ahead – but we were more than confident that we could deliver a balanced budget whilst protecting vital public services.”

The latest report to come to the cabinet suggests that not all of the savings set out in Coun Whitby’s budget have been made. Most of the current problems stem from a failure to secure Government spending cuts in politically sensitive areas including social services and the education budget.

The document makes it clear that two of the highest spending departments – Adults and Communities and Children Young People and Families – are unlikely to meet substantial savings targets.

A year ago the coalition was prevented by the High Court from saving £15 million by axing care packages for 4,000 vulnerable adults. It has proved difficult to deliver the same level of savings by other means.

Efforts to save £6 million by cutting free school buses were dropped after it emerged that 5,000 youngsters with disabilities and learning difficulties would be affected. The council is still consulting about reorganising the home to school transport service.

Coun Ian Ward (Lab Shard End), deputy leader of Birmingham City Council, said: “We feel it is important that the public know exactly where we are with the budget cuts that were implemented without solid plans for how they could be achieved.

“It is now up to the new Labour-led council to plug holes it did not create. We will do our best but this is a massive challenge – further black holes could very easily appear as the year progresses.

“The remainder of the year will undoubtedly be difficult, but to protect the interests of the most vulnerable in the city, we will do all we can to ensure measures are put in place that cause the minimum impact possible to the services we deliver and the quality of life enjoyed in Birmingham.”

 

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