Birmingham City Council has been plunged further into financial crisis after it emerged extra Government cuts mean it will have to make savings of £825 million a year by 2017 – £210 million more than expected.
Writing in the Birmingham Post today, council leader Sir Albert Bore revealed the authority now faces an even bigger black hole in its finances, and called for the National Audit Office to step in.
He believes an urgent investigation into the Government’s management of local authority funding needs to take place after a series of measures reduced the authority’s spending power.
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Last year Sir Albert coined the phrase “The Jaws of Doom” for a graph showing expenditure versus falling government grant, which would mean the council running out of money by 2017. But this is now set to widen to £825 million a year, compared with the £615 million previously forecast.
Coun Bore (Lab, Ladywood) said a series of new Treasury and Department for Communities and Local Government moves have drastically hit the council’s spending power – and mean brutal service cuts will be inevitable.
However, critics say money is not being spent efficiently and it is disingenuous to suggest there had been any surprise budget reductions.
Sir Albert said: “To pretend that [the cuts] can be delivered by traditional efficiencies and the sort of savings the Secretary of State for Communities and Local Government has highlighted is simply misleading. This council has not sought to delude itself or its citizens that these massive budget reductions can be achieved in this way.”
He added: “We will protect key services wherever possible but it may be necessary to cease the provision of others altogether.”
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The Post previously reported that £615 million would have to be saved by the council by 2017 – half of the core budget – leading Sir Albert to declare “the end of local government as we know it”.
However, he says that figure – which is seen as a major impediment in solving crises at the council’s struggling children’s services department – has now increased drastically.
Sir Albert said the Chancellor George Osborne’s Budget last year, which increased savings targets, added £77 million a year to the deficit by the 2017 financial year.
That was followed by a worse-than-expected fall in government grants which will set the city council back a further £65 million in four years’ time, £23 million more than predicted.
In today’s Post, Sir Albert calls for the National Audit Office to examine central government’s management of its funding to councils, and to assess the future viability of local government if these cuts go ahead. “Let us start turning the tables and ask the auditor to look closely at all of this,” he added.
Sir Albert’s criticism of the cuts follows Local Government Association (LGA) claims funding was being cut by more than expected. Walsall Council also this week claimed it must make £100 million of savings over the next five years, £20 million more than expected.
Chair of the LGA, Sir Merrick Cockell, said the Government’s approach to funding for local services was magnifying the impact of continuing cuts.
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He said: “People will be surprised that the Government is hoarding hundreds of millions that needs to be spent on frontline services at the soonest possible date. The impact on services is likely to come much sooner than 2015/16 as many councils will be compelled to hold money from the intervening years in reserve in order to ensure they can balance the books as they are legally required to do.
“Caring for the elderly and vulnerable, picking up the bins and monitoring schools performance are not second priority services. They are absolutely essential but in order to deliver them properly councils need to be able to make accurate financial plans based on clear information. This funding settlement simply does not provide the certainty councils need.”
However, a Department of Communities and Local Government spokesman said: “To help tackle the deficit left by the last administration, in the recent Spending Round, the Coalition Government set out a saving of 2.3 per cent for 2015-16 in overall local government spending, including funding from central government, business rates and council tax income. This change is balanced with a progressive package of measures which create a real opportunity to transform local services and help deliver better outcomes for less.
“It is disingenuous to suggest there are further budget reductions since the total amounts allocated to local authorities have not changed since the spending round.”
MP John Hemming (Lib Dem Yardley), a regular critic of Sir Albert, said the financial forecasts included spending the Labour leader “wished” for, rather than should be budgeting for.
He said Birmingham had fared better than most from Government cuts, and Sir Albert should focus on cutting his cloth accordingly.
He said: “Sir Albert puts all the wish lists under the sun into this ‘Jaws of Doom’. The worst thing he did was when he came into power and reorganised all the responsibilities, so it wasn’t clear who was responsible for what.
“I have looked into the figures behind this. There is no point putting all the wish lists under the sun, coming up with the ‘Jaws of Doom’ and saying ‘woe is me’. Times are tough and we have got to cut our cloth accordingly.”
Mr Hemming cited the recent decision to spend money on personality tests for councillors as an instance of council was