City service heads face ‘star chambers’
BFormer council leader Sir Albert Bore
IRMINGHAM City Council is being ‘complacent’ over its significant financial failings, former leader Sir Albert Bore has warned.
Sir Albert argued bosses were too quick to claim the authority was suffering the same problems as other councils and was ignoring its own massive overspends, particularly in waste services.
It comes as the Labour-led administration published its formal response to auditors Grant Thornton which issued a rare set of recommendations after the authority used £117 million of reserves in two years.
Finance and governance director Clive Heaphy declared that the council faced “challenging and uncertain” times and warned services may have to be axed if considerable savings targets of around £120 million by 2021/22 were to be achieved.
But chairing the council’s resources overview and scrutiny committee on Tuesday, Cllr Bore (Lab, Ladywood) took issue with Mr Heaphy, pointing out that the local government sector as a whole had suffered funding cuts.
Referencing the recent audit report, Sir Albert, who led the council until 2015, said: “They said the key pressure point for most metropolitan authorities is the social care budget which is overwhelmingly demand driven.
“It is relatively unusual for key financial challenges to relate to place-based services (waste management).
“This is an indication that things have gone badly wrong at Birmingham in this regard.
“I do not believe your report to council addresses the serious point the auditors made.
“There is a complacency almost that we are part of a problem which exists across local government, and yes, I do acknowledge we are part of a problem that exists across local government.
“But the external auditor is indicating that there are other things going wrong in Birmingham and we are different in many respects in some of the problems we are experiencing.”
Last year’s bin strike along with heavy snow contributed to the waste service being overspent by £5.3 million in 2017/18.
The auditors also highlighted that the council’s construction and property services company Acivico overshot its budget by £9.5 million during the same period.
Cllr Meirion Jenkins (Con, Sutton Mere Green) echoed Cllr Bore’s sentiments and argued there was a ‘lack of recognition’ of what was really happening. He also expressed particular concerns over Acivico’s troubles and said: “Just reading this (response to auditors) it’s got a kind of ‘Yes Minister’ feel about it, it’s saying all the words, it’s going through the motions but I’m not entirely convinced the seriousness of the situation has been grasped.”
He added: “The council as it currently stands, in the current culture, is never going to be able to operate commercial companies profitably because it just doesn’t have what it takes to do it.”
Mr Heaphy pointed out that by 2021/22 the council will have lost three quarters of a billion pounds worth of its Government funding in 11 years – more than 50 per cent of its budget.
Yet he maintained the savings requirements for the next four years were not ‘insurmountable’.
He said: “Birmingham City Council must address these issues, however difficult the decisions it needs to take to address them.
“This may involve re-designing some services, working in partnership with other bodies to deliver other services, reducing service levels and stopping some services altogether.
“Without these actions, the council will continue to eat into its reserves and find itself in a financially unsustainable position.” COUNCIL finance and governance director Clive Heaphy outlined recent measures which had been taken in response to auditor Grant Thornton’s recommendations.
They include imposing extra restrictions around spending reserves and reinstating ‘star chambers’ where department bosses are required to explain and justify overspends on their individual budgets.
Mr Heaphy said this was already producing results, having reduced this year’s budget overspend forecast from £28 million to £12 million in two months.
He stated that future annual budgets would be more focused on council priorities and added: “There is no complacency on my part.
“The council can’t continue to spend more than it gets in, full stop. It can’t keep relying on reserves. Reserves are there for rainy day events.
“They are not there to support on-going pressures and problems.”