City faces "mammoth task" to balance budget after £49m overspend emerges

Birmingham City Council faces “a mammoth task” to balance its 2017/18 budget, the Birmingham Independent Improvement Panel has warned, after it emerged that the local authority has overspent by around £49m in the current financial year.

The panel said the overspend had resulted from “flawed planning and insufficient delivery of the council’s revenue budget for the year”. It warned that “with very limited general reserves available, this potentially places at risk its future success”.

The concerns were expressed as the panel published its latest letter to the Secretary of State for Communities and Local Government, reporting on the city council’s progress in implementing the recommendations of the Kerslake Report issued in 2014. The letter was published alongside the council’s own self-assessment of its progress Strengthening the Foundations.

The panel noted some positive aspects of Birmingham’s progress between April to October 2016, including new senior management staff with “new skills, insights and contributions” joining the council, and the recently appointed four assistant leaders involving and listening to residents. However, it also expressed concern about the slow pace of change in the council’s organisational culture.

John Crabtree, chair of the panel and former senior partner of law firm Wragge & Co (now Gowling WLG), said: ‘Our discussions with the Leader, Cabinet members and chief executive have demonstrated that they are actively engaged in joint working to understand and grip the full challenge now facing the council, and to identify and consult on the measures needed to bridge the very substantial financial gap for 2017/18.

“Given the need for the council to have absolute confidence in the deliverability of the 2017/18 revenue budget when asked to approve it in March 2017, we have agreed with the council to jointly commission an independent review of the 2017/18 budget. The review will have a particular focus on the quality and robustness of the council’s delivery plans for 2017/18 across all areas of expenditure.”

In its letter the panel called on the council to continue to maintain its focus on the “very important" improvement programmes relating to education and children’s social care, including the development of plans for a Children’s Trust.

Birmingham’s Leader, Cllr John Clancy, said: “I welcome the panel’s acknowledgment, just two years into a five-year improvement programme, that Birmingham City Council has already made considerable progress.”

He added: “The panel is correct to recognise the extent of the extremely challenging circumstances facing the council as it focuses on developing a robust medium-term financial strategy – a challenge made all the more difficult by year-on-year cuts to Government grant allocations.”

The council’s chief executive, Mark Rogers, said: “My team and I take the comments made by the Improvement Panel very seriously. We are pleased that the progress we have made in many areas has been recognised.

“The continuing and profound reductions to local government funding mean that the budget setting process has become increasingly challenging. The Panel is correct in describing the setting of the 2017/18 budget as a ‘mammoth task’ and it is one that we are not going to shy away from. We are equally determined to continue the wider work to improve ourselves and will not lose sight of our responsibilities to improve safeguarding and education services.

“These are the toughest of times ahead, but I have a strong team with me who as are committed as I am about delivering positive change for Birmingham.”