Thursday the 5th of September marks the first anniversary of Birmingham City Council issuing it’s first S114, effectively declaring the Council Bankrupt. The City would go on to issue a second S114 and a S5 only weeks later - all in part related to the massive equal pay liability ran up by the Labour Administration since the bin strike deal in 2017. A team of commissioners were then sent to Birmingham in autumn 2023 by the government to oversee the Labour Administration’s attempts to put the Council House in order. A year on, there is still no resolution to equal pay, there is no new job evaluation scheme delivered, and the 2025/26 in-year budget gap will be £195 million.
Commenting, Cllr Ewan Mackey (Con, Sutton Roughley), Deputy Leader of the Opposition and Birmingham Local Conservatives, said:
Labour were warned multiple times over a number of years ahead of the bankruptcy about the need to get a grip of issues around equal pay, oracle implementation, and savings delivery. They buried their heads in the sand and sought to blame anyone but themselves. The section 114 notice should have been a wake-up call, but one year on we appear to be no better off, with Labour being warned that they still lack a credible plan to balance the books. They should never have been in this position in the first place, but having found themselves in the mess they created, they should be pulling out all the stops to fix it. Instead, the city is facing more inaction and delay.
Cllr Robert Alden (Con, Erdington), Leader of the Opposition and Birmingham Local Conservatives, added:
It’s deeply worrying that the Labour Administration still doesn’t have a sufficient plan in place to right the Council’s finances. They’ve already hit residents with their double whammy of a 21% council tax rise over two years and fewer frontline services. With continued delays to delivering the job evaluation scheme needed to fix Equal Pay, Oracle still not fixed, and in-year savings delivery still off track, the Council’s financial position is just getting worse meaning the budget gap -already at £195 million next year – continues to deteriorate. If Labour refuse to adjust their strategy and get a grip of this appalling situation then residents will be hit harder than ever.
In a cabinet report for next week the Commissioners have warned Birmingham City Council's cabinet (Document.ashx (cmis.uk.com)) that
Commissioners are of the view the Council does not have sufficiently robust plans to balance the budget in 2025/26 and subsequent years. Commissioners agree the themes set out in the report are appropriate, however, we are not confident that the Council can deliver sufficient savings to bridge the budget gap.
adding
To deliver c£195m savings next year would be challenging for any organisation. However, completing the task over a longer period will cost more and prolong this challenging period. The Council needs to understand the consequences of this approach.
Going on to say
We set out below some broad recommendations;
• The Council needs to make sure that a clear financial message along with expected behaviours is communicated and consistently reinforced to all staff. The message needs to set out a compelling change story.
• There needs to be a focus on delivery on all aspects of the MTFP. Programme management has been improved, however, the financial position needs to be managed like the crisis it is.
• The Council needs to work at pace identifying savings from many of the components in the letter - procurement, energy, corporate landlord, TOM including support service modernisation etc so these can be quantified and incorporated into the MTFP. In addition, commissioners believe there are more efficiencies to be found. A more fundamental transformation is possible and Oracle can be a real driver of savings across the Council.
• Commissioners believe that all areas of expenditure need to be explored. Appropriate focus must be applied to Adult Social Care and Public Health.
• Children’s Services pressures/budget approach are a key component of the deteriorating budget position, including with regard to the Children’s Trust. The Council must satisfy itself that all pressures have been identified and are appropriately calculated. Commissioners are supportive of the work the improvement partner is likely to undertake. This may involve a fundamental review of Childrens services.
• The Council is undertaking some further work on Birmingham specific budget pressures, such as PFI and migration. This work needs to be completed as soon as possible.
• Commissioners believe the current spend controls need to be strengthened in relation to both Children’s and Adults social care, and recruitment. Our expectation is that there is non service involvement in this process, and all expenditure is in scope. We acknowledge that the spend control boards as applied to non social care expenditure are operating effectively.
• Given the deteriorating financial position, we are also concerned the latest forecast indicates a shortfall in capital receipts. Commissioners will explore though the established process how this can be brought back on track."
