Sir Albert Bore, Leader of Birmingham City Council, today unveiled the financial challenge facing the City Council in the budget consultation 2013/14.
Sir Albert said today:
“The average reduction in Government funding for the country as a whole has amounted to £74 per person. However, Birmingham's reduction has been more than double the national average, at £149 per person. If Birmingham's grant had been cut by the same amount as the national average then it would have received an extra £80m each year. Many cities in this country need a fair share and I intend to take this back to Government.
“More than two thirds of our income comes from central Government, and if those grants are turned off then we won't just catch a cold, we will catch influenza.
“The combined impact of grant reduction and rising local costs means the council will have to make savings of more than £600m by 2016/17, as illustrated by our 'jaws of doom' graph*.
“When we are taking out, over six years, around 50 per cent of the budget the council has control over then this will be reflected in the number and size of service cuts that we have to make.
“We can't go on any longer treating the budget exercise in the way we have previously. We will now have to look at all services in terms of what are statutory and what are fit for purpose, and if there is not a near zero-cost solution then we will have to decommission.
“This is no longer a matter of whether we close down services or individuals lose services, but by how much those services are reduced or taken out altogether.
“This is now a very different ball-game, no more salami-slicing, those days end with this budget. We are now talking about removing services that the people of this city value, services that vulnerable children and adults in this city need.
“This will now affect Birmingham as an economy, we need a pleasant place in which to live and work, but the city will suffer. These cuts are dramatic this year and they will continue to be dramatic in years to come.”
Sir Albert added that the Chancellor's statement yesterday did not help. The two per cent budget cut to the Department for Communities and Local Government and local government itself in 2014/15 would impact further on town halls up and down the country.
* see page 8 Business Plan and Budget 2013+ document
Introduction by the Leader of Birmingham City Council - Sir Albert Bore
Since being elected to lead the city in May we have been open and honest about the difficult budget decisions we are facing. Now, as we consult on our budget for next year, I want to set out clearly the situation we are in.
The financial challenge facing the City Council is much worse than we feared.
- The Council's previous plans included an expectation of making savings in 2013/14 of around £70m.
- In reality this will be at least £110m because of last minute cuts in government funding and increased costs, meaning we must find at least another £40m of savings.
- As part of this some savings planned by the previous administration are not deliverable, requiring further new cuts of over £30m.
But despite the cuts we will still be spending a large amount of money in the City and employing many dedicated staff striving to deliver vital services. We want to know what you think our priorities should be and if you support the principles that will guide our decisions. We also want your views on the proposed budget reductions next year listed in Appendix 2.
We will be holding a number of public events. At these you will be able to question me and other Cabinet Members. We will listen closely to your views. There will also be other ways to get involved, including social media so that people can take part more easily.
Of course the spending reductions we face were made in London not in Birmingham. Most of the money we spend comes from central government - only around a tenth is raised through the Council Tax. Some cuts are the direct result of decisions by government, such as changes to Council Tax Benefits.
In the longer term, we estimate grants will fall by at least £310m between 2011 and 2017. At the same time we are facing increased spending pressures from inflation, the changing needs of the city's population, changes in the law and the costs of borrowing. We think this will add a further £290m to the money we need to maintain current services over this period. So the total gap between what we need to spend and the income we receive will rise to £600m.
Extensive efficiency savings have already been achieved and must continue to be secured. But the sheer scale of the cuts means that we can no longer put off fundamental and difficult decisions about the way the council works and the services it provides. It falls to my administration to make those decisions. So, starting now, we are also seeking your ideas on the bigger changes we must make.
Whatever we think about the cuts, a responsible council must plan how to live within the reduced income we will have. But we have also called on the Government to join in a mature discussion about how we can provide adequate services in the future.
We value your response to this consultation. Your views matter to us and will influence our decisions. Thank you.
Sir Albert Bore
Birmingham City Council