Past budget ‘raises serious questions’ for councillors in Birmingham
Birmingham councillors across the political spectrum have been left stunned after a “damning” report set out the “horrors” created in a critical past budget.
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The city council has been gripped by financial turmoil and effectively declared bankruptcy in September 2023, with the following 2024/25 budget featuring unprecedented cuts to local services.
National issues such as funding cuts and the rise in demand for services have contributed to the crisis but Birmingham-specific mistakes such as an equal pay fiasco and the disastrous implementation of a new IT and finance system have played a role too.
And now a report on the budget in the 2023/4 financial year has put a spotlight on other past missteps by the council’s Labour administration.
Government-appointed commissioners, sent in to oversee the council’s recovery, said they had previously commented on the “poorly constructed” budget in the past.
“This report demonstrates just how inaccurate that budget has proved to be,” they wrote in the report.
“Only 18 per cent of planned savings were delivered which raises serious questions about both the due diligence arrangements and delivery mechanisms.
“In addition, there were revenue overspends totalling £97m, which is 10 per cent of the net budget.”
Councillor Sir Albert Bore (Labour, Ladywood) said during a recent finance scrutiny meeting that he was “astounded” to read their comments, adding: “I have never, in the time I’ve been on this council, read a report which sets things out in such a damning manner.
“There should have been due diligence, we should have prevented that budget having been set in the manner it was set.”
He argued that the budget problems that the council is in “arise from the horrors that were created in the 2023/24 budget”.
“We cannot escape from that,” he said.
Both the report, and the comments from the commissioners, sparked deep concern from Labour and opposition councillors.
Liberal Democrat councillor Paul Tilsley CBE (Sheldon) agreed the comments were the “most damning we have ever seen as far as Birmingham City Council is concerned”.
“On top of this, we then have Oracle, we then have equal pay, we then have Perry Barr,” Conservative councillor Alex Yip (Sutton Wylde Green) added.
“We have a lot of significant things which underline this and a lot of it is completely within the council’s own hands.”
“When you set your budget, in the nicest possible way you’ve got to be ruthless,” Ewan Mackey (Conservatives, Sutton Roughley) said. “You’ve got to make sure you deliver because wavering and things like that just means it’s worse further down the line.”
Katherine Iroh (Labour, Billesley) described the situation as “appalling”, telling the meeting: “Coming up with realistic, deliverable savings proposals, the process and mechanisms were just not there.”
Councillor Fred Grindrod (Bournville and Cotteridge) meanwhile urged the committee to acknowledge the wider-picture, saying local government was in “ruins”.
“The real truth is this, local government was broken by 14 years [of the previous government],” he said.
“It is our challenge to get this [Labour] government to listen because if we don’t, those of us on the Labour benches here, we will really be failing the residents of our city.”
‘We would urge the council to remain focused’
Karen McCarthy, the cabinet member for finance, told the committee that there will be an inquiry into what went wrong leading up to the 2023/24 budget.
“We could have done so much better,” she said. “But it does illustrate the need for the approach we are taking.
“We are moving forward but we do need to look at this and learn the lessons.”
The Labour administration at the council has said in the past that it is taking action to transform the authority and put it back on the path to financial stability.
Commissioners recognised the positive progress which had been made, writing: “An accurate budget and capital programme is a fundamental building block of sound financial management.
“It is pleasing that improvements have been made and we would urge the council to remain focused on ensuring further progress is made in this area through the finance improvement programme.”
The report added the 2023/24 financial year was particularly difficult due to demand and inflation pressures, non-delivery of savings and the significant costs associated with the implementation of Oracle.
