Tories slam ‘inept’ Labour as council ‘on financial brink’ Auditor’s rare warning as the local authority spends £117 million of reserves in two years
THE city council has been branded ‘blitheringly inept’ after burning through £117 million worth of reserves in two years provoking a ‘rare’ warning from auditors.
Birmingham City Council’s financial failings have been laid bare in Grant Thorton’s annual audit report for 2017/18 which one opposing Conservative councillor described as ‘the most damning’ he had ever seen.
The Tory group has now warned the authority is on the ‘brink of collapse’ while the Labour-led administration has pointed the finger at government cuts to councils across the country. Key points from the audit include: The council has used £116.9 million worth of reserves in 2016/17 and 2017/18 to balance its books but still made an overall deficit of £35 million in the period.
The use of reserves has ‘masked’ the true financial position with the council effectively running at an annual deficit of £75 million.
Waste management is a particular concern with that department alone overspent by £5.3 million last year.
Last year’s bin strike took focus away from budget monitoring while £1.6 million spent on private contractors to provide cover during the dispute was not ‘properly authorised’.
The council has not been ‘transparent’ around its use of reserves with internal reports painting a better financial picture throughout the year than was in fact the case.
This year and future years look ‘extremely challenging’ with a ‘demanding’ savings target of £117 million by 2021/22.
Grant Thornton has now issued a ‘rare’ set of recommendations using powers under section 24 of the Local Audit and Accountability Act which will prompt a full council debate on the issues in September.
The auditors also took the ‘unusual’ step of making a recommendation for a specific department which demanded that the waste service was more ‘robustly’ managed having declared things had gone ‘badly wrong’ in that area.
The current situation prompted grave concerns among members of the audit committee.
Cllr Meirion Jenkins (Cons, Sutton Mere Green) described the report as the most ‘ damning’ he had ever seen. He said: “It is hard to know where to start. The thing that strikes me as particularly bad, up against some pretty stiff competition, is that information has been withheld from auditors or being presented in such a way to put you off the scent. It is highly concerning the administration of the council has got to a point where they feel they can do that and not suffer any consequences.” Referring to the recommendations he added: “It is really hard to know how the administration can be so blitheringly inept to put ourselves in the position we are in.” Conservative group leader Cllr Rob Alden (Erdington) said: “It is very rare for a council to be issued one notice, to be issued two is unheard of yet it has happened again and with finances under the control of Councillor Ian Ward for the last six years what is now clear is that Labour have taken the city council to the brink of financial collapse.” This year the council has introduced measures to make cabinet bosses and chief officers more accountable for the financial performance of their serv i c e s while they have been told they cannot use further reserves.
However, council leader Ward pointed to a reduction in funding from Whitehall.
He said: “We always knew that this would be a challenging year financially.
“The early revenue reports bear this out.
“However, I have made clear that directorates must deliver their services within budget. The council must take the decisions necessary to live within its budget and not rely on reserves to do this.” monitoring
He added: “Birmingham is not alone in the financial pressures it faces, this is a local government wide issue that needs to be addressed.
“The Local Government Association has predicted a £5.8 billion funding gap for the sector in just two years, and has launched a consultation on how to deal with the £3.5 billion funding gap relating only to adult social care.
“The government cannot continue to watch those services for our most vulnerable, struggling to cope with pressures due to severe reductions in funding.”
It is really hard to know how the administration can be so blitheringly inept Cllr Meirion Jenkins (Con), right