Sir Albert Bore’s budget speech to City Council, 3 March 2015 CHECKED AGAINST DELIVERY
Lord Mayor, I would like to present our budget proposals for 2015/16 to this City Council for approval.
It has become traditional for me to start this speech by saying that this year’s budget was even harder to produce than last year’s. Sadly, that is again the case.
And I would like to begin by thanking once again all the dedicated staff who have helped us to put this budget together.
Lord Mayor, this will be a year of many challenges and major changes for the City Council.
And it will also be a year in which the nation makes a momentous choice about the future.
So, today I also want to talk about the future:
- the future this City and this City Council may face as a result of that choice;
- and the future we want to create for ourselves.
The scale of the cuts – overall budget
Lord Mayor, excluding grants for specific, ringfenced purposes, the cut in corporate grant to this City Council between 2014/15 and 2015/16 is a staggering £100m – 18.6% cut in one year.
This is the largest cut ever in our corporate grant funding in a single year.
Even after taking into account council tax and business rates increases, we have lost around £85m of income, or 8.6%.
And on top of that we continue to face rising pressures of service demand, including £6.5m of pressures in adult social care alone.
Overall we have had to find £105m of new savings to balance this budget for the year ahead.
We have already taken responsible measures such as rescheduling our provision for debt repayments and drawing some funds from our reserves, in order to reduce the impact of that horrendous cut on the people who depend on our services.
Without these measures we would have had to find a further £100m of cuts in this budget.
Lord Mayor, this budget increases the Council Tax by 1.99%, the same as last year. In the consultation on the draft budget, 81% of respondents supported an increase, including 31% who wanted an increase above 2%. Less than 20% supported the Council Tax Freeze that the Government proposes.
Within the Housing Revenue Account we will increase rents by 2.2%. Our Housing Investment Programme will provide for £309m of investment over the next three years, including £129m for new homes and regeneration.
Last month Cabinet approved investment of £58m for improvements to council homes, as part of this spending, allowing us to improve around 6,000 homes.
A budget that reflects our priorities
Despite the scale of the cuts, we have brought forward a budget that reflects our aim of protecting the most vulnerable in our city as far as we possibly can.
We undertook a rigorous prioritisation exercise and proposed greater cuts to areas that were less critical to our priority outcomes.
Lord Mayor, the clearest possible signal of our priorities is our decision on funding for the safeguarding of children in this city – our absolute top priority.
We haven’t just protected that service from the cuts.
We have now increased the budget by an extra £21.5m.
Our values and our priorities are what the people of this city will see in this budget.
Lord Mayor we have listened closely to feedback from the budget consultation and made a number of adjustments to our initial proposals set out in December.
And I would like to publicly recognise the many groups and individual service users who have campaigned on the services that they rely on. We have listened to their arguments and wherever possible we have adjusted our plans.
Those campaigners are a credit to this city and to its local democracy and all of them are living testimonies to the damage that government cuts are doing to this city.
In services for people with mental health problems and disabilities we have reduced the proposed cuts to third sector commissioning by £618,000 and the cut to Supporting People by £400,000.
We have reduced proposed cuts to advice services which provide support for people affected by benefit changes and cuts. And we are developing new partnership arrangements to support these services.
We have introduced a new Youth Offer to support young people into work and training.
We have removed the proposed cuts to the home adaptations service.
And we have also withdrawn the proposal to cut school crossing patrols. But sooner or later our schools are going to have to take responsibility for these services directly outside their school gates.
In the Library of Birmingham we have moved to mitigate the impact of cuts on specialist collections and on child literacy. And we are exploring options for further funding from partner organisations.
I might add that if the previous administration had paid more attention to that when the Library was first planned we might be in a more sustainable position now.
We have proposed cuts in back office functions totalling over £17m in the year ahead – again reflecting our priority to protect frontline services. But as Kerslake pointed out, we are now lacking capacity in some important strategic areas and we cannot assume that cutting the so-called back office can continue forever.
Nevertheless the budget before us today contains many cuts to frontline services that we did not want to make.
As I said when we published the draft budget last month, it will take a progressive vision, better partnership working and more involvement of local communities to respond to these challenges.
Lord Mayor, the people of Birmingham can see our political priorities in the points I have just made and they can see how we have listened to their views despite the financial pressure we are facing.
They can see the difference a this Council makes and they can see the efforts we have made to protect some of the most vulnerable people in this city.
Whilst the budget inevitably focuses on the cuts we must make, let us remind ourselves of some of the many positive things this City Council is doing this year.
- Our Business Charter for Social Responsibility now has over 160 accredited firms. Over 19% of our total spending is now with accredited suppliers and we were named in the top 20 councils nationally for spending with small firms.
- A group of 55 car parking wardens had their pay raised by 20% to the Living Wage on 1 February, after the council awarded its latest contract to NSL.
- The Birmingham Jobs Fund has helped over 800 young people into jobs in the last year
- We have reduced the use of bed and breakfast accommodation for homeless households from 183 in April 2014 to 30 on 5 February this year.
- In the autumn we launched the Birmingham Connected transport investment plan and in the last month we have launched the Snow Hill Masterplan and the East Birmingham Prospectus for Growth, setting out opportunities for creating 9,000 new jobs.
Our Future Council Plan – responding to the challenge
As I said earlier, this is a year of other great challenges for the City Council and this budget needs to be seen in that wider context.
We have changed the Business Plan documents this year-this is the start of a process of reviewing our strategic planning process and making sure we have a sharper focus on priorities and objectives.
Lord Mayor, the first part of the document before members today describes how we will develop our plan for a Future Council in more detail over the year ahead, engaging with all councillors, partner agencies, communities and other stakeholders as we do so.
I have said many times that we must completely redesign the City Council and work better with others to provide those services and to achieve the outcomes needed in the years to come.
We will also be developing our strategic partnership arrangements at the city level and working with partners to produce a shared vision for the future of Birmingham and its public services.
The challenge of improving our safeguarding service for children is still with us.
There is a long way to go, but I believe we may at last be turning the corner. We are just nine months into a three year improvement programme, but we have a strong leadership team and we are focused on delivering change rapidly.
We have taken the decision to put in the extra money to make sure that this improvement is maintained until the children of Birmingham are safe. But as we have agreed with Lord Warner, a total of over £120m of extra funding is needed over the next three years to make permanent and sustainable improvements. Government will need to help provide these extra resources.
The challenge of improving the governance of some of our schools is also being addressed. Responding to the failings in specific schools, governors have been removed where necessary and we have established a new whistle blowing policy which is monitored to ensure all complaints are followed through. We have also strengthened the governor appointment and training process.
But we need to do more than just fix problems in a small number of schools. Education changes lives and is at the heart of our commitment to a fairer and more prosperous city.
We are now working with schools to strengthen the Birmingham Education Partnership – our initiative – and we have established a shared ambition that, by 2018 all schools in this city will be at least ‘good’ and preferably ‘outstanding’.
And we are also responding comprehensively to the findings and recommendations of the Kerslake Review – all of which we are working to implement, with the support of the Independent Improvement Panel.
Our draft Action Plan has been published and everyone can see how we intend to respond to each and every one of the recommendations.
Lord Mayor, I cannot overemphasise how important it is to the future of this City Council that we are able to demonstrate a clear plan of action and, by the end of the year demonstrable improvement across all the Kerslake recommendations.
The Chief Executive and I are dedicated to achieving these objectives. But we are looking to everyone in this Chamber to make a contribution.
But, as the Chief Executive has said to staff in recent blogs, we must also move on from simply responding to specific recommendations. Profound culture change and the complete redesign of our services will not happen by simply obeying instructions from outside.
Incidentally, this is a view that is strongly supported by the Improvement Panel.
This will not be Bob Kerslake’s agenda or the government’s agenda or even the Independent Panel’s agenda.
It will be our agenda for change and improvement.
It will be made in Birmingham by all of us, by our staff and by the people of this city.
It will be our Future Council Plan that we create together.
Consultation and engagement
Now, I know that there have been some frustrations about the fact that we have had to move quickly to produce the Action Plan. That was essential to ensure the credibility of our response at an early stage. But that plan is not the end of the process. It is the very beginning.
As set out in the Action Plan itself, the changes we need to make cannot be achieved without close engagement with councillors, partner agencies, local communities and all stakeholders in the city. And that engagement will take place over the year ahead and beyond.
Lord Mayor, this council approved a Community Governance Review in September of last year, before the Kerslake review. The Review will respond to the proposals for a town council in Sutton Coldfield but also look at the way the whole of the city is governed and how its local services are delivered.
The Review is being steered by a cross-party group of councillors that now includes the leaders of both opposition groups.
Last week we started a wide ranging conversation with the people and businesses of Birmingham about that Review.
During the summer, there will be further consultation papers on the radical changes we need to make to local services and on how we support active citizenship in our communities.
One of the papers published last week gives an initial analysis of the Sutton Coldfield proposal.
We will publish a final response in the summer and the people of Sutton Coldfield will then have their say on the matter.
As I said in my email to all councillors last week, there will be specific internal consultation with members about the details of some of our governance arrangements.
I have arranged a number of meetings of my own group for this purpose and I look to Bobby and to Paul to take that forward in their respective groups.
The challenge of future cuts
But let no one be under any illusions about the scale of the challenge we face and the need to make very difficult and radical decisions in the years ahead.
Lord Mayor, difficult as this budget has been, under the existing plans of the coalition government we must make further cuts of £253m by 2017/18, of which only £55m has already been identified.
This means that by 2017/18 we will have cut spending by over £820m since 2010/11.
A few weeks ago, the Public Accounts Select Committee published its report on the sustainability of local government funding. One of its recommendations reads as follows:
“The Department should open up a wider consultation with local government on which statutory services local authorities should be expected to deliver, if there are to be further periods of funding reductions.”
So there we have it.
A cross-party committee of the House of Commons has come to the conclusion that we will not be able to provide all our statutory services if the cuts continue.
Lord Mayor, I would like to know what the government thinks we should stop providing.
The people of Birmingham will already be finding it hard to understand how the government can be so out of touch that it thinks we can make those cuts with no damage to services.
And they know that deep cuts to local government don’t stop at local government.
With cuts of this scale it is not possible to avoid impacting on social care for older people and this has a knock-on effect on the NHS as we all know.
Recently the LGA said that councils will have to divert £1.1bn from services like road maintenance, libraries and museums in 2015/16 to social care for older people.
Since 2010/11 the proportion of local government spending on adult social care has risen from 30% to 35% as councils desperately try to limit the impact on older people by making cuts elsewhere.
Last week the Independent Commission on Local Government Finance published its final report.
The report says that public services are’on the edge of collapse’ without urgent financial help and that local authorities are ‘on a cliff edge’, due to past and planned cuts.
It warns that ‘services that are part of everyday life may not be there much longer’
But the report doesn’t just complain about the cuts. It proposes a way forward. It calls for devolution and local freedoms to control funding and set local priorities.
That is why I and the other Core City leaders protest about the cuts.
It’s not because we want to be negative or simply attack the government. It’s because we know there is a better way of doing things and a better, more positive future for our local services.
We have been saying for some time that the current way of providing local services is not sustainable with these spending cuts.
And the current way of driving local growth is not delivering what we know we can achieve.
So that is the choice that we face.
A future of cuts on a massive scale with no serious devolution or reform is no future at all. It would mean ruin for our local services and misery for millions who depend on them. Instead we need radical devolution and integration of services and control over our own income, borrowing and investment plans.
Good news on the economy
But, Lord Mayor, there are two sides to this coin. The great tragedy is that this onslaught on our public services comes at a time of great optimism for the Birmingham economy.
The Government does not seem to understand that a successful city and a successful nation needs both economic growth AND decent public services. Failure on either holds the other back.
The other, brighter side of the coin can be seen in the latest economic data
- Economic output grew by 4.2% between 2012 and 2013. This is nearly three times the UK rate of 1.6%, nearly double the rate in Manchester and nearly three times the rate in Leeds.
- There were more foreign investment projects in GBSLEP last year than any other LEP area at 77 more than double the previous year.
- Birmingham is the top destination outside the South East for people relocating out of London according to ONS data
- Birmingham had an increase of nearly 230,000 or 32% in the number of international visits between 2012 and 2013 – the strongest growth in the country and more than all other core cities put together
- At £21bn in January to September 2014, exports from the West Midlands have been the second highest in the country behind only the South East – and higher than London. Almost half of all exports to China from the UK come from the West Midlands and it is the only region with a balance of trade surplus with China.
But the data alone cannot convey the current sense of excitement about the city’s economic prospects.
We can also look at the many development projects underway or due for completion this year, including the Midland Metro extension and New Street Station, new shopping at Grand Central and the re-opened Mailbox and the start of work on the Paradise development.
Over £1bn of investment projects will be completed in the city this year.
And there is also the less obvious but equally important resurgence of small businesses and start-ups in areas such as Digbeth, which is becoming a hot bed for social enterprises and digital and creative business.
In January Birmingham was named the ‘most investable city in the UK’in a survey by the Urban Land Institute of the plans of European investors.
Next week we will be joining forces with our partners as a Greater Birmingham delegation to the MIPIM conference.
We take our message to global investors with renewed confidence about what is happening in Birmingham now and our prospects for the years ahead.
We will let the world know about our plans for the Southern Gateway, the Snow Hill Masterplan, Arena Central, the Curzon Masterplan, the Icknield Port Loop regeneration and the Paradise development.
But we will also be promoting the Black Country Enterprise Zone, the regeneration of Wolverhampton City Centre and the four zones of UK Central â€“ including Jaguar Land Rover, Birmingham Airport, the NEC, Birmingham Business Park, North Solihull, Solihull Town Centre and Blyth Valley Park.
Greater growth, greater change and greater connections – adding up to a Greater Birmingham that is set to become not just a national powerhouse but a global powerhouse in the years ahead.
Our positive agenda for the future
So, Lord Mayor we have a positive commitment to the future of the City Council and there is genuine excitement about the future of the city.
Alongside the other Core Cities we are campaigning for greater powers and freedoms for local government. The tide of that argument is beginning to turn and we need to make sure that it gathers strength in the months and years ahead.
The announcement last week that the Greater Manchester councils will jointly control NHS and social care services with the NHS from 2016 is a major breakthrough.
And again we need to look to ourselves and our partners and say ‘we can do that too’.
But we will also push whoever is in government after May to have the courage to create that devolved and integrated health and social care service for the whole country.
Over the year we will set out plans for changes to our local governance and all our local services.
That includes modernising the way that citizens and service users interact with the council and how we can work better in partnership, sharing information and other resources to achieve better outcomes.
It includes plans for radically different integrated services for the local place or neighbourhood, rethinking services such as housing, advice, community centres, environmental services and libraries.
And we will take forward our plans for the Combined Authority and develop an integrated support service so it can deliver on its role of leading our economic and transport strategies.
All of this will create a new Operating Model for the city council – not for separate directorates but the whole council working together.
The overriding purpose of this new operating model will be to give the people and communities of this city more control over their lives and more opportunities to make their contribution.
Lord Mayor, in conclusion I have been clear that this budget contains real cuts that we would rather not have made.
We have conducted a thorough and open consultation on our budget proposals and responded on many of the issues people raised.
We have delivered a budget against the odds and ensured that vulnerable people are protected as far as possible.
This is a time of great economic opportunity for the city. But we must put in place our Combined Authority and work with the next government to ensure that Combined Authority has the powers, the funding and the freedoms to achieve our true potential.
There are likely to be further reductions in public spending. But they must be sensible and balanced reductions and not a destruction of our local services.
But whatever that choice and whatever the approach of the next government we must also set out our own positive plans for change.
We will look to the future and make 2015 the year in which we work with our partners to create our plan for the Future Council and the future Birmingham.