Soaring inflation will see city council overspend by £44.6m

BIRMINGHAM City Council has warned it will face a budget overspend of at least £44.6 million despite a return to ‘rigorous spending’ controls, as inflation continues to strangle public sector finances.

The council claimed even if it delivered all savings targets, the value of risks outweighs any money clawed back and financial prudence by around £44.6 million.

Risks to the council’s budget include a £23.9 million overspend on Birmingham Children’s Trust, an independent body from the council.

Home to School Transport, now known as Children & Young People Travel Services, faces an overspend of £16 million.

The report states: “We continue to recognise that there are a number of risks to balancing the budget. These risks must all be carefully gripped and managed at pace and offset by opportunities to make savings.

“We have returned to rigorous spend controls focusing on staffing, facilities management, and procurement.”

Yvonne Mosquito, cabinet member for finance and resources, acknowledged the “very real difficulties” Birmingham residents are experiencing.

She said inflation as a result of “printing money” was to blame but said although the council faces “a very tough year financially”, it is a robust financial position with reserves at £945.8 million.

Last month, a stark financial report warned the council is dealing with one of the most serious financial challenges it has ever faced, as inflation continues to bite.

According to the report, the council predicts a £80 million shortfall during the 2023/24 financial year rising to as much as £146.5 million by 2026/27.

Birmingham Conservative leader Robert Alden claimed one of the factors for this sharp budget black hole was agency staff.

He said: “I’ve had answers to written questions at recent council meeting, highlighting in some areas, it’s up to 90% of staff are actually agency.

“Clearly this is now having a significant impact on the actual budget of the council. As we can see, that service now has a £4.9 million overspend.

“Parking targets haven’t been changed. The council has gone down around making it more difficult for people to drive in the city, then you need to change your parking targets, because clearly you’re not going to have as many people parking here.

“That wasn’t done, and there’s actually a £4.3 million shortfall in income against the target. That’s due to people ending up having to drive all the way out to the ringway to travel but a few 100 metres.”