Birmingham finance plans ‘at risk’ if overspending culture continues

An independent review of Birmingham City Council’s financial progress has revealed that though plans for the coming year are “robust”, continuation of any overspending into 2017-18 or 2018-19 could put the council’s financial sustainability “at risk”.

In a letter updating the communities secretary, Sajid Javid, on Birmingham’s financial position, drawn up by the Birmingham Independent Improvement Panel, it was reported that “lessons had been learned” from 2016-17, and that now there was a great need for strong leadership in order to deliver the council’s financial plans for the coming year.

It also warned that improvement to council finances had been “disappointingly slow”, and that the council had to do better in the future after it did not grasp all the opportunities it could have to make additional savings in its budget.

It was noted that as a result of the substantial overspend incurred during 2016-17 and its knock-on impact in 2017-18 it is estimated that the council will have used up £104m of its reserves over the 2015-16 – 2018-19 period compared to a previously planned use of £41m.  The letter noted, though, that any continuation of overspending “will put at risk the council’s financial sustainability”.

In conclusion, the letter stated: “New financial plans are now in place and these are more robust and credible. The plans and strategies however will not be easy to implement. Some implementation timetables are still extremely ambitious and the risks to achieving fully effective delivery are high.”

Commenting on the review, council leader John Clancy said: “The panel is right to conclude that lessons in relation to delivery of the 2016-17 city council budget have been learned, and that there is a ‘strong determination from the leader and cabinet’ to provide the political support needed to deliver fully our latest financial plans.

“I am pleased that the panel believes the council’s 2017-18 budget proposals to be ‘credible and robust’ and has identified improved arrangements for monitoring the delivery of savings.”

Clancy also made reference to the “strong resolve” among senior managers and council members to avoid further financial disaster that the council experienced over the past year.

“There is of course much more to be done to deliver in full the recommendations set out in Lord Kerslake’s 2014 review of Birmingham City Council’s governance capabilities, but I believe political resolve and strengthened senior management capacity will do just that,” he concluded.

Last year it was reported that council services in Birmingham were facing £340m worth of cuts as the local authority warned it was facing the “greatest financial challenge ever”, announcing that it would be undertaking a six-week consultation into council finances.

The council’s full budget is duet to be agreed when the full council meets to discuss the matter tomorrow.


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