Birmingham City Council's "Mammoth Task" To Balance Budget

9 November 2016, 12:01 | Updated: 9 November 2016, 12:31

Birmingham City Council house

Birmingham City Council is facing a "mammoth task'' to balance its budget after a £49 million overspend, according to a critical report.

The report's authors have also warned the authority's ``flawed'' financial planning and the slow pace of its organisational shake-up ``risks its future success''.

As a result of the estimated overspend, the council faces the prospect of finding another £78 million in cuts by April 2018, on top of its own planned savings.

Two years ago following the alleged ``Trojan Horse'' scandal, the damning Kerslake Report into the local authority's operation identified serious failings at the council but concluded the authority should not be broken up.

Instead, an independent improvement panel was set up to oversee a long term shake-up of working practices, management and governance.

The Kerslake Report had concluded many of the council's problems were ``the result of a series of poor decisions over a number of years'', but two years on, the panel has said the pace of change was too slow.

In its latest progress report, panel members said the council's loss of control over its spending for the current financial year had put the wider plans to improve council functions at risk.

Cash will now have to be used from the reserves to balance this year's budget.

In their letter to Communities Secretary Sajid Javid, the panel said the huge overspend was down to ``unrealistic and many previously undeliverable proposals''.

In a further damning conclusion of the council's own financial oversight, panel chairman John Crabtree told Mr Javid there had been ``insufficient understanding and ownership of the council's 2016/17 budget''.

The council also failed to maintain control over spending despite senior management, including chief executive Mark Rogers, being warned about the issues last year.

The panel said: ``This represents a mammoth task for the council, to be achieved over a very short time scale.''

Meanwhile, plans to make savings by developing partnerships in adult health and social care were ``unlikely to deliver financial savings'' and the council's ``late recognition has made the council's financial challenge much greater''.

However, the panel said it acknowledged that the council was making progress in many other areas, and noted the ``positive difference'' from a new intake of managers.

The city council has acknowledged the report and is to recruit a chief operating officer.

A joint independent review of the next financial year's budget will also be carried out, while the panel will report back on the council's progress next March.

Council leader John Clancy said: ``I welcome the panel's acknowledgement, 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.''

Mr Rogers said: ``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.''

A Department for Communities and Local Government spokesman said: ``Since the Birmingham Independent Improvement Panel has been in place, real progress has been made at Birmingham City Council but there is still more to do.

``We will give our full response to the panel's recommendations shortly.''