"A beacon of fairness" Leader's 2013 budget speech

By on 26/02/2013 in Leader, News

Checked against delivery and political references removed

Cllr Sir Albert Bore

Cllr Sir Albert Bore

“A beacon of fairness”

Speech by Sir Albert Bore, Leader of the council, to the city council budget meeting – 26 February 2013

Lord Mayor,

This is the sixth budget I have presented over the time I have been the Leader of the City Council – and it is without any shadow of doubt the most difficult challenge that I have ever had to bring before this Chamber.

Nevertheless, we have managed to bring together a budget and business plan in line with the objectives and priorities I set out in the Leader's Policy Statement in June 2012.

Local government has been hailed by many people, including the Prime Minister in recent months as the most efficient part of the public sector.  At times it has an uncanny ability to deliver what seems impossible.

I want to give credit to all the dedicated officers who have helped us to put together this budget in very trying times.  As councillors we should always remember that without their dedication and professionalism local government could not function.

Lord Mayor, we are in the middle of the largest cuts in local government funding any British government has attempted in the modern era.

Let me say right at the start of this debate that we on the Labour side of this Chamber recognise the need to tackle the national deficit. Yes, that deficit - the difference between the public sector's total receipts and its total expenditure over a given period - has fallen from £159bn 2009-10 to £122bn 2011-12, but the total public debt has gone up from £811bn (55.3% of GDP) in 2010 to £1,140bn (70.7% of GDP) in 2012.  What we disagree with is the speed and depth of the cuts and the fact that local government budgets are being cut by around one third in four years, after taking account of inflation - far more than any other part of the public sector.

Of course, we knew when we took office last year that there were tough times ahead.  But the situation is in fact much worse than we first thought.

The previous administration left us with a significant black hole, including £23m of promised savings in the Children's budget which were simply not deliverable.  The new cuts in the 2013-14 budget are some £30m more than they should have been if there had not been the black holes in the 2012-13 budget.

And they also left us with a low level of reserves and a significantly increased level of debt.

But, Lord Mayor the failings of our predecessors are as nothing compared to the smoke and mirrors performance of the Department for Communities and Local Government.  A performance that they hoped would distract us from the gross incompetence and unfairness of the local government settlement.

They failed to produce the provisional settlement on time, leaving all councils with less time to prepare and consult on their budgets. The provisional settlement finally arrived on 19 December – probably the latest it has ever been.  Perhaps next year they will give it to us as a present on Christmas Day?

And to add to the uncertainty and confusion which this delay caused, they juggled some more with the rules for the council tax referendum threshold, the council tax support scheme, and the business rate retention system.  The funding for public health was not announced until 10 January - well into the final stages of the consultation period on the budget.

The gap between this government's rhetoric and the reality of the cuts they are imposing on local councils is simply incredible.

They have come up with a new way of measuring local government funding: Spending Power – not the grant they give us but the total money from all sources we have to spend. In December they announced that Spending Power would fall by a mere 1.7 per cent in 2013-14.  The figure for Birmingham would be 1.1 per cent.  The Secretary of State told MPs this was a “modest” cut.

But it turns out that they got their sums wrong, including double counting income from council tax.  The true figure was 2.6 per cent. Usually when ministers make such mistakes they return to the House, apologise for misleading MPs and make the correction.

But that would be far too open and transparent for this Government.
Instead they waited until the final settlement was announced, added in the Public Health funding which had by then been conveniently announced and, hey presto! they came up with a new figure of 1.3 per cent.

Of course even when corrected these figures bear no relation to the actual cuts in grant and the savings that councils are having to make.

In Birmingham we will have to make cuts and savings of over £100m or 10.5 per cent of our net revenue budget for next year, 2013-14.

And this was supposed to be the easiest year of the spending review period!
The Secretary of State appears to be in denial about the reality of cuts councils are having to make.  But this is not just us moaning as some would like to think.

Baroness Eaton, the former Chair of the LGA, when referring to the reality we face today in this Chamber, said that ministers were “detached from the reality councils are dealing with”.

The current chair, Sir Merrick Cockell, has called the cuts “unsustainable”.
And the Conservative Leader of Kent County Council has said “the county cannot cope with further reductions and is running on empty”.

The way the Government has chosen to distribute the cuts is unfair to Birmingham and other areas with more deprived communities.  If Birmingham had been given just an average cut it would by now be £79m better off - a sum in excess of the cuts introduced by the budget I am presenting today.

Between 2010-11 and 2014-15, we are amongst the ten most deprived council areas in the country which will lose six times more spending power per head of population than the ten least deprived.

The councils that will suffer the biggest cut in spending power over the next two years in order of the size of the cuts, are Liverpool, Hackney, Newham, Manchester, Knowsley, Blackpool, Tower Hamlets, Middlesbrough, Birmingham and Kingston upon Hull.

Knowsley will lose £206 per household, Camden £200 and Liverpool £184, while Surrey will lose just £14, Wokingham £43 and Windsor and Maidenhead £46.  We in Birmingham lose £149.

Eric Pickles says that this is inevitable because these are the places that received the most money in the first place.

It cannot be right that the Prime Minister's leafy Cotswold district of West Oxfordshire is getting a 3.1% increase in spending power next year, along with parts of Dorset and Surrey. Anyone who tries to defend that is defending the indefensible.

Of course the Government claim that their new funding system – which enables councils to retain increases in business rates and to be rewarded for new housing developments - has replaced a “begging bowl” system with freedom for all councils.

But again the rhetoric and reality diverge.

In reality the Government has created a highly complex system which attempts to both incentivise growth and protect councils against big losses.  But the money is simply being moved from one council to another - it is not new money.

The effect, for example, of the New Homes Bonus has been to move money from the North and the cities to the rural South and South East - to reward areas where housing growth is already happening, rather than incentivise development in other areas.

Areas with greater service needs, like ours, will still rely on grants for most of their income whilst others are able to rely completely on council tax and retained business rates.

It is becoming clear that the long term strategy to move away from a formula grant system based on need to a system that gives more money to areas of growth whilst leaving less successful areas to rely on ever dwindling income.  This is what they mean by doing away with the “begging bowl”.

You would have thought that ministers would keep quiet, because this is too horribly Dickensian, but no.

Instead they have chosen to mount a sustained campaign of misinformation that has distracted people from the truth and attempted to put the blame on local councils.

Councils have been attacked for paying high salaries, for hoarding reserves, for failing to sell off assets, and for being undemocratic.

Well in case ministers haven't noticed, most Birmingham City Council  staff have had their pay frozen for the last three years and thousands of them have lost their jobs.

As for the great myth of massive reserves, ministers should look more carefully at where they are before they criticise all councils.

Our unallocated reserves are in fact around 1.85 per cent of our net budget - significantly below the ideal level and far less than the £100m DCLG suggests.  Far from raiding the reserves, our auditors have repeatedly advised building them up.

Eric Pickles claims to be a localist.

Well it's a very strange sort of localism that involves ministers constantly telling councils what to do and attacking them every week in the press.

Many councillors have lost patience with this way of doing business.
More than thirty of them signed a letter to the Prime Minister in January urging him to stop the “patronising language being used to attack those working extraordinary long hours for our communities”.

They included the leaders of Derbyshire, Warwickshire, Essex, Buckinghamshire, Wiltshire, Lincolnshire, Leicestershire, Kent, West Sussex, East Sussex and Durham.

According to the Daily Telegraph, they said to the Prime Minister “it is important that you understand how disappointed and even angry local activists are and how many might not be there when we need them as electoral foot soldiers”.

And the response from the Government. The Financial Settlement confirmed sparsity calculations for rural areas and an additional £8.5m.

Don Foster last week gave his full backing to the settlement and said “I genuinely believe the settlement is fair”.

But he also went further and disgracefully accused Newcastle City Council of making “politically motivated cuts”.

The patience of pragmatic Council leaders has snapped.  Liverpool's Lord Mayor, Joe Anderson – portrayed by Pickles as a politician with whom he could do business - has warned of civil disorder and has accused Pickles of being removed from reality in a “M25 bubble”.

Lord Mayor, we are debating the budget for next year, but we also need to plan further ahead.  Unfortunately the picture does not get better any time soon.

The provisional figures for 2014-15 show that the cuts in grant are likely to be more than double those for 2013-14.

The Spending Review for 2015-16 will be announced later in the year and the Chancellor has said that he is looking for a further £10bn in cuts.  With schools, health, overseas development and defence procurement protected it seems likely that local government will again be singled out for cuts.

The National Audit Office has recently estimated that 12% of councils could be at risk of becoming financially unviable.  It has urged DCLG to come up with a plan to deal with multiple financial failures.

As I have shown with the Jaws of Doom graph I presented to the national press, we estimate that the gap between what we need to spend to maintain service levels and the income we will have will grow to £615m by 2016-17.  That is around half of our controllable budget.

Lord Mayor, there are some people who criticise me for being too negative.
The truth is it would be a cruel deception to pretend the challenge is not there.  I will not deceive the people of this city and pretend that all their services can be maintained in the years ahead, only to let them down later.

Some people are in denial about the scale of the crisis as much as the Secretary of State.

They are seemingly operating in a parallel universe and believe that a few more efficiency savings will see us through - and some argue that we should produce a deficit budget and let the Secretary of State intervene.

So I am sorry if some people don't like it but it's necessary to repeat the message.

Only if we grasp the scale of the challenge ahead will we be able to find solutions.

Of course the Government suggests that all will be well if we simply follow the helpful tips in their Fifty Ways to Save - or “Pippa Middleton does local government” as Paul Dale has dubbed it.

Incidentally if anyone is wondering where the Secretary of State found the inspiration for his “how to” guide, we've discovered an interesting little piece which appeared in the Daily Express just as DCLG were preparing their document.

It was entitled “50 Ways to Save Money this Christmas”.  It advises people “for an even cheaper option, get the kids involved.  We get ours to make paper chains and cards for the family”.  The authors inform us that “we have a refillable advent calendar” and a “sell before you buy policy at Christmas”.

But possibly the best tip is this one.  “Instead of paying for a Christmas tree, ask if your local tree seller has any scrap branches (you should get them for free).  Stand them in a large flower vase with other seasonal foliage from the garden”.

So there we have it.  The age of austerity, with the Secretary of State revealed as Ebenezer Scrooge.

But we should take the guide seriously, or Mr Pickles will tell us off.
So, I asked Council officers to go through all the tips and let me know how we were doing on each.  You won't be surprised to hear that we are doing rather well.

In short, thank you very much Mr Pickles for the advice but we are already doing most of the things you suggest.  They will not add up to the level of cuts we need to make.

Another favourite demand of ministers is that we sell off our assets to meet the cuts.  But the rules laid down by the Treasury mean that we can only use a small fraction of any income from sales in our revenue budget.  We do welcome the government decision to allow us to use income from asset sales to off set equal pay costs.  But far from being forced by ministers to go down this route it is something that we have lobbied for.

But this does not mean, as implied in a recent article in the Birmingham Post, that we will need to conduct a fire sale of all the “family silver”.  We have £6bn of assets from which to draw this income and an adequate programme of sales is being developed as part of the agreement we have reached with the government to address the equal pay challenge we inherited.

David Bailey wrote in the Birmingham Post recently that our approach is too cautious, and that we should only look two years ahead.
He implied that we would cut too much by focusing on projections that might not come to pass.

Does anyone seriously imagine that we would make more cuts than necessary?

The scale of the problem we are facing means we cannot simply make year on year efficiency savings.  We have to plan for a radical change in what the council does and how it does it, and that will take years to bring about.

So we have already begun a programme of fundamental service reviews that will identify the activities that contribute most to our objectives, those that could be done more cheaply and those that could be discontinued.

Over the year ahead we will be consulting further on a radical re-invention of the City Council so that it can continue to provide vital public services and support economic prosperity and social cohesion with significantly less income.

But, to come back to Professor Bailey, he also says we have no Plan B.
Well I can tell him that Plan B will need to involve the Government working sensibly with us to implement a more sustainable funding system for local public services.

This must include a real solution to the crisis of social care funding and major steps to integrate and localise funding through community budgets.

The people who really need a Plan B are George Osborne and Eric Pickles.
So, I stand by our analysis of the prospects to 2017.  The city faces huge cuts to funding, which need a responsible, systematic and medium-term response.

Lord Mayor, we have run a comprehensive consultation process on this budget.

575 people attended the four public meetings; we had 723 responses to the online survey; additional meetings took place with a group of people with disabilities, with business rate payers and with voluntary organisations.  There were also two meetings with 66 members of the People's Panel.  830 individual responses were also sent directly to the City Council and I took part in 2 live web chats.

We have been open, honest and transparent about the challenge ahead.
We have put full details of the feedback we received on the website.

And, unlike the last administration we have taken responsibility as a Cabinet and appeared at public meetings to listen to the concerns of residents.  We did not hide behind Council officers.

There was also strong support in the consultation for our key priorities.  But there were strong concerns about the impact of cuts on the voluntary sector and on vulnerable children and young people.  We listened and have responded to all of these concerns in our final budget proposals.

One area where we did not follow the advice we received from the public was on the level of council tax.  People were broadly content with the modest increase of 1.6% we proposed in the consultation.  But the changes the government has made to the calculations now mean that it makes more sense to accept the subsidy they are offering and freeze the level of council tax for a further year.

This was a pragmatic decision based purely on the best outcome for the people of Birmingham.  Unlike the Government we will not play politics with the council tax.

But for me the strongest message from the consultation was about young people.  We heard the voice of young people loud and clear in the public meetings.  The commitment of the many who attended and their engagement with the political process does them credit, and illustrates the potential of our city.  In response, I intend my Leader's Policy Statement in June to set out a new focus for the Council on young people.

We are determined to build even more effective engagement with residents and to develop new ways of working with them in the year ahead.  Only by working with the people and communities of the city will we be able to meet the challenge of further cuts.

Lord Mayor, we are also strongly committed to working more closely with the staff of the City Council.  Our “Fresh Start” initiative has already led to new ways to work with our staff and I have taken part in listening sessions with staff as part of the consultation.

We will shortly be launching a new staff suggestion scheme including an on-line voting system.

We have also established a new consultative committee with the trade unions to ensure effective engagement all the way through our major service review programme.

Lord Mayor I have already referred to the unfairness of the cuts between different parts of the country.

In contrast, this Labour administration seeks, wherever we still can, to become a beacon of fairness.

Lord Mayor, the Government's unfair policies are bringing a shadow of fear and uncertainty across the lives of many people in our city.

I am proud that we have led the way in introducing a Living Wage for City Council staff.  It will ensure that all work is valued and all our staff have the dignity of a wage that enables them to provide for their families.

The next step is to persuade more and more employers in the city to adopt the same approach through our Business Charter for Social Responsibility.

But one of the most deceitful cuts of this Government has been in relation to Council Tax benefit.

Let us be clear.  The ten per cent cut – £10m – was made directly to the grant for council tax support.  If ministers had wanted us to make cuts elsewhere they would have taken it from general grants.  The Secretary of State has often described council tax benefit as being “out of control” so it is very clear what their intentions are.

We agree that pensioners had to be protected from the cut. But ministers panicked when it appeared that two thirds of councils would not be able to absorb this cut and hundreds of thousands of low paid and unemployed people would be charged a portion of council tax for the first time.  So they offered some more funding.  Unfortunately by then most councils had already started consulting on their schemes, as required by law in order to agree them by the deadline of the end of January.

About a third of councils have taken the money.  But it is only for one year.  Next year all of those councils will be back to the same dilemma and even less able to absorb the cost.

And, taking the money only limits the charge to 8.5 per cent.  This is despite government advice that councils should avoid making many small charges because they would be disproportionately expensive to collect.

What a mess!  A cynical political ploy that will lead to even more financial pressure on those with the lowest incomes.

And after all of that ministers have the gall to blame councils, like ours, for these decisions.

Lord Mayor, the best way to bring more fairness to our city is to support business and enterprise and help them to create jobs.  That's what we're doing.

Despite the difficult financial situation, through focusing on the key priorities confirmed through the budget consultation, we will be able to take forward several key developments for the city including:

The new £15m Birmingham Jobs Fund to help young people into work and training;
The new women’s enterprise hub that I launched with the Shadow Business Secretary.
The City Centre Enterprise Zone, launched with the Chancellor of the Exchequer last Friday.

Since coming to power Labour's approach has been to work constructively with the Government on growth and the cities agenda.  That was clear to the Prime Minister when our cross-party and business delegation met with him last September.  He appreciated that.

One initiative that has resulted from that meeting is the Greater Birmingham Project in which we are working with Lord Heseltine to refine his proposals on growth and ensure that Birmingham and our city region makes the most of the opportunity it presents.

The Government must now respond to this by providing a substantial single pot of growth funding and devolve it to the cities, as Lord Heseltine suggests.
At the same time we as a city region must rise to the challenge and deliver the strong local leadership that is required to drive investment and support growth.

The crisis we are facing and the opportunity for progress is too great to allow any local divisions to stand in our way.

The great cities are the engines of growth and the country will not prosper unless we do.  I have said publicly many times that I believe this government has been very positive in recognising that and seeking to give more powers to the cities.

In order to drive that debate more effectively I have ensured that we are engaged much more closely with the Core Cities group and I have been working in a new partnership with the other leaders and mayors to strengthen the group and ensure it has the maximum impact on government.

Lord Mayor, this budget has been more challenging than expected and the challenge will get bigger in the years ahead.  The approach of the government to the process has been disappointing and we would urge them to work with councils and the LGA in a more positive spirit in future years.

Despite this we have been able to propose a budget that protects key areas of service to the most vulnerable people in the city:

•    it seeks to speed up adoption and fostering to give the most vulnerable children a better start in life;
•    it promotes closer working with the NHS to integrate health and social care budgets;
•    it supports focused and co-ordinated benefit advice and support to those who need it most;
•    it delivers a living wage for our lowest paid colleagues;
•    it introduces a radically modernised new refuse collection service which will lead to less litter and future savings;
•    it promotes greater participation and community engagement, such as giving young people control of resources for youth participation;
•    it begins to ensure that schools play a fuller role in providing appropriate services from their own budgets;
•    it ensures the maximum possible funding for services whilst protecting council tax payers through a further freeze in the council tax rate.

Lord Mayor, Birmingham has faced many challenges in the past and shown the enterprise and spirit to pull through.

In the nineteen eighties we lost more manufacturing jobs than Wales and Scotland combined, but we found ways to invest, to support a switch to a more service based economy and to drive a renaissance of our city centre.  Similar initiatives and greater drive and energy is now needed to establish Birmingham's future.

Now in the midst of this latest economic crisis, there are signs that the West Midlands may be finding a renewed role as a centre for advanced manufacturing and engineering.

Thanks to firms like Jaguar Land Rover the region is once again becoming a global hub for automotive engineering.

One of the greatest strengths and unique selling points of the city is our diversity and the way in which communities and faiths come together to support each other.  We need to recognise this appropriately with renewed governance arrangements.  It was clear during the budget consultation that there is a tremendous well of voluntary action to be tapped.

We must draw on that spirit now if we are to rise to the challenge before us.

We will work closely with all of our partners across the city region and with the government to support enterprise and growth.  But we will also challenge the government to face up to the impact of the cuts they are imposing and to engage with us constructively about the way forward.

I commend this budget to the Council.

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