By Vivienne Russell | 23 October 2012
Birmingham City Council is preparing the ground for spending cuts of more than £120m next year, warning that it will have to discontinue some services entirely.
The authority, England’s largest, said today it would begin its budget consultation for 2013/14 next month. Council leader Sir Albert Bore said it faced a budget deficit ‘well in excess of £40m’, up from the £2m–£3m that had been expected when the 2012/13 budget was set.
The council blames ‘significant levels of uncertainty and instability’ introduced by Whitehall late in the financial planning cycle. Bore said: ‘We’re facing a cuts scenario in 2013/14 that is much more severe than was ever originally envisaged.’ He said that if further cuts proposed by Local Government Secretary Eric Pickles filtered through, the deficit could double.
‘In total, there’s going to be something in the order of £100m taken out of the budget in 2013/14. There were already £70m of cuts in 2012/13 but we think that will have to grow to well in excess of £120m to take care of the problems that we now know are about.’
Birmingham is bracing itself for dwindling grant reductions in each of the next four years that fail to keep pace with rising costs. Next year, for example, the council is estimating a grant reduction of £192m against rising service demand of £207m, creating a £399m black hole. By 2016/17, Birmingham is expecting the black hole to have grown to £605m.
Bore explained that, by 2016/17, the council would have faced six years of budget reductions and lost 48% of the council’s controllable budget. ‘That’s an enormous sum,’ he said.
The financial challenges facing Birmingham would change the nature of local government not only in the city, but nationally, the council has concluded. ‘Salami-slicing’ was no longer a viable approach to cost-cutting. ‘We’ve got to the end of that game,’ said Bore.
‘There will have to be, over the next year or two, the decommissioning of some services. We simply will have to stop doing things. Not only will we have to stop doing things, we’ll have to insist that others take on board some of the activities that have been the responsibility of Birmingham City Council.’
He gave the example of schools, which are increasingly funded directly from Whitehall.
Birmingham is also warning residents that it has ‘very little leeway’ on the council tax level for 2013/14. Each 1% increase in the tax brings in only an extra £2.6m in revenue. Accepting the government’s offer of an extra 1% in grant in exchange for a council tax freeze would leave it facing a £2.3m shortfall next year against current plans.
Birmingham said its priority was to protect its most vulnerable residents and put fairness at the heart of its decision-making. It is appealing for a wide-ranging response to its budget proposals.
Unison regional secretary Ravi Subramanian said the union would work with the Labour-controlled council to seek a 'fair deal' for the city from Whitehall.
He added: 'Losses of up to 1000 full-time jobs have been mentioned which will not only be devastating for those individuals and their families but also for the services that the community relies on.
'This will have further devastating effects on our local economy, which is already suffering due to the government’s failing austerity measures.'
Birmingham City Council is preparing the ground for spending cuts of more than £120m next year, warning that it will have to discontinue some services entirely.
The authority, England’s largest, said today it would begin its budget consultation for 2013/14 next month. Council leader Sir Albert Bore said it faced a budget deficit ‘well in excess of £40m’, up from the £2m–£3m that had been expected when the 2012/13 budget was set.
The council blames ‘significant levels of uncertainty and instability’ introduced by Whitehall late in the financial planning cycle. Bore said: ‘We’re facing a cuts scenario in 2013/14 that is much more severe than was ever originally envisaged.’ He said that if further cuts proposed by Local Government Secretary Eric Pickles filtered through, the deficit could double.
‘In total, there’s going to be something in the order of £100m taken out of the budget in 2013/14. There were already £70m of cuts in 2012/13 but we think that will have to grow to well in excess of £120m to take care of the problems that we now know are about.’
Birmingham is bracing itself for dwindling grant reductions in each of the next four years that fail to keep pace with rising costs. Next year, for example, the council is estimating a grant reduction of £192m against rising service demand of £207m, creating a £399m black hole. By 2016/17, Birmingham is expecting the black hole to have grown to £605m.
Bore explained that, by 2016/17, the council would have faced six years of budget reductions and lost 48% of the council’s controllable budget. ‘That’s an enormous sum,’ he said.
The financial challenges facing Birmingham would change the nature of local government not only in the city, but nationally, the council has concluded. ‘Salami-slicing’ was no longer a viable approach to cost-cutting. ‘We’ve got to the end of that game,’ said Bore.
‘There will have to be, over the next year or two, the decommissioning of some services. We simply will have to stop doing things. Not only will we have to stop doing things, we’ll have to insist that others take on board some of the activities that have been the responsibility of Birmingham City Council.’
He gave the example of schools, which are increasingly funded directly from Whitehall.
Birmingham is also warning residents that it has ‘very little leeway’ on the council tax level for 2013/14. Each 1% increase in the tax brings in only an extra £2.6m in revenue. Accepting the government’s offer of an extra 1% in grant in exchange for a council tax freeze would leave it facing a £2.3m shortfall next year against current plans.
Birmingham said its priority was to protect its most vulnerable residents and put fairness at the heart of its decision-making. It is appealing for a wide-ranging response to its budget proposals.
Unison regional secretary Ravi Subramanian said the union would work with the Labour-controlled council to seek a 'fair deal' for the city from Whitehall.
He added: 'Losses of up to 1000 full-time jobs have been mentioned which will not only be devastating for those individuals and their families but also for the services that the community relies on.
'This will have further devastating effects on our local economy, which is already suffering due to the government’s failing austerity measures.'
