Council Business Plan and Budget 2013+

By on 07/02/2013 in Budget Views, Leader
Cllr Sir Albert Bore

Cllr Sir Albert Bore

Download the draft Council Business Plan and Budget 2013+

Foreword by the Leader of the Council, Sir Albert Bore

The City Council is facing an enormous financial challenge in the years ahead as we grapple with the biggest cuts in Government funding in this country in modern times. National Government has set itself a target to reduce significantly the public spending deficit by 2017.

In just four short years from 2011 to 2015, over a fifth of the money given to councils across the country will be removed with no allowance for inflation – and the cuts have not been made fairly. In Birmingham we are facing around twice the national average cut. If an average cut had been applied, this would have given us £79m more funding since 2011 – approximately the level of new cuts we need to introduce into the 2013/14 budget.

Under our centralised system, we rely on central Government for most of our income – only about a tenth comes from Council Tax – so these cuts have a huge impact. Our freedom of movement is reduced even further because much of the money we receive is earmarked for specific services like schools, and we have no say on how it is spent.

The City Council has been making efficiency savings and changing the way it works for many years. Actions taken since 2011 have already lead to savings of £275m per year, and our work force has been dramatically reduced. But as the years go by it gets more and more difficult to do this without adversely affecting the services people receive.

We have conducted an extensive consultation on the City Council's budget for the year ahead and we have been able to respond to your comments and make some important changes to the proposals set out in December. Full details of the feedback and our response can be found in this report.

I am pleased to say that the response was very positive and I would like to thank all of those who gave their views, either in public meetings or through other means - they have been invaluable in helping us to shape the Council's priorities and spending plans.

As part of this exercise, we also asked people what they thought the rate of Council Tax increase should be. Most people thought that a small, below inflation increase of 1.6% was reasonable. However, the Government has created a complex system for supporting a Council Tax freeze which has made it very difficult to calculate the impact of different levels of Council Tax on our finances, and this calculation has changed several times. We have made our decision purely on what will produce the best financial outcome for the City Council without placing an undue burden on Council Tax payers. I now judge that to be taking the Council Tax freeze grant. Further details on this decision can be found in Part 7 of this document.

We estimate that by 2017, grants to the City Council will fall by £300m from the 2010/11 level. We are also faced with increased spending pressures from inflation, the changing needs of the city's population, changes in the law and the costs of borrowing, which we estimate will add around £315m to the bill for maintaining current levels of service provision. The total gap between what we need to spend and the income we receive will rise to around £615m - a scenario I have described as the “jaws of doom”.

As we face up to the challenge of saving around £615m by 2016/17, we will be engaging further with the public throughout the coming year as we aim to reshape our role and ensure we make the best use of resources for those most in need. There are more difficult decisions to come - but this Council is committed to working in tough times for fairness, social justice, enterprise, innovation and accountability.

My first duty in these circumstances is to be open and honest with the people of Birmingham about the difficult and painful decisions we must take. There is no magic wand available and it would be a cruel deception to claim otherwise. We must by law balance the budget each year. We are not prepared to defy the law and set a deficit budget as some have urged us to do.

Instead we will act responsibly. I did not come into politics to reduce people's services and the support they need, but there is no alternative to reducing expenditure. We will deal with this crisis in the fairest possible way and defend the most vulnerable in our city. We will work tirelessly with the people and communities of the city and the dedicated staff of the Council to find ways to meet this challenge.

Birmingham City Council will continue to spend significant sums of money next year and beyond. We want to make sure this is invested in ways that achieve the best results for the people of this city, and in my Policy Statement to Council last June I set out our vision for Birmingham:

An inclusive city in which many more people can play their part - a fair chance for everyone in Birmingham.

In particular, we want to offer the best possible chance to the next generation – so a major theme of our work in the year ahead will be to improve the life chances of our young people and to support them in these difficult times.

Youth unemployment is a scourge that is damaging the prospects of a new generation and will leave scars on young people in terms of their future earnings and employability. But it is also a tremendous burden and cost to the whole of society: 10.7% of 18-24 year olds in the city are on Job Seekers Allowance, compared to 7.5% nationally. In some of our wards, this rises to a quarter of all in that age group. Combined with the spiralling cost of rents and mortgages, these figures mean that the lives of far too many young people are on hold and they cannot make their way in the world. Many also face the additional challenges of mental health difficulties, anti-social behaviour, substance addiction and crime. Our young people are the future of our city and it is right that we make it our top priority to address the challenges they are facing.

We have already published the report of our Commission on Youth Unemployment and are putting together £15m of funding for our Birmingham Jobs Fund, to support employers taking on young people and give additional training and support to young people themselves. With such bold initiatives we are showing what we can do by working in partnership with others who share our aspirations for the city.

And I am proud to be able to say that Birmingham City Council was one of the first in the country to pay a Living Wage to all its employees - many of whom are women in front-line roles such as cleaners and kitchen assistants. This is now being promoted amongst Birmingham businesses and those with whom we have contracts as part of our Business Charter for Social Responsibility. It is helping individuals and families, improving productivity and boosting the overall well-being of Birmingham's citizens. It is making a real difference, and we will continue to press hard for its adoption throughout the city.

We have made it very clear to the Government that cuts of this scale mean a looming financial crisis in our great cities - the very places the nation relies upon to create jobs and prosperity in the future.

We will continue to work with the Government to reignite Birmingham's potential for growth and prosperity, and on key initiatives such as the Local Enterprise Partnership and the City Deal. We have recently announced our intention to work with Lord Heseltine to implement the proposals of No Stone Unturned in Search of Growth - a unique opportunity to unlock the investment and enterprise that the city has been crying out for.

Whatever we think about the cuts, a responsible council must plan how to live within the severely reduced income we will have. Like the upheavals in the world economy, these challenges were not made in Birmingham but we have no choice but to meet them head on. Many people will have a contribution they can make and we want to work with the people of the city to find our way through these difficult times.

We understand the financial difficulties that many people in Birmingham are facing at this time. We will do our utmost to ensure that spending reductions are made in a way that makes the least possible impact on those most in need.

One of Birmingham's greatest assets and strengths is its tremendous diversity and the way that different faiths and cultures come together to spark innovation and enterprise. There has rarely been a time when that strength is needed as much as now. If we are to achieve our aims then we must pull together, to find ways of coping with these difficult times and supporting our fellow citizens who are most in need. We must also come together to challenge the Government with a united voice that demands a fairer and less damaging economic policy.

Download the draft Council Business Plan and Budget 2013+

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