Birmingham’s financial recovery plan described as ‘high’ risk

Plans to repair Birmingham City Council’s finances are high-risk and extremely ambitious, according to the improvement panel overseeing the authority.

The council this week approved its £550m budget for 2017/18, which outline £71m in cuts.

However, in a letter to communities secretary Sajid Javid, Birmingham Improvement Panel chairman John Crabtree voiced worries over the delivery of next year’s budget and subsequent planned savings.

His letter said: “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.”

In addition to the service cuts, the council is proposing to make up its revenue budget shortfall of £111m by using £46m of general reserve funds.

It plans to replace these reserves by equivalent savings in 2018/19. However, any overspending in the next two years could result in a risk to the council’s financial stability, according to an independent financial review team which scrutinised the proposals on behalf of the panel.

A report by the review team said: “Whilst there is merit in this objective, in view of the extent and pace of change required to get to this position, it was the view of the review team that this would be difficult to achieve, and that the council should consider whether a more realistic strategy would be to plan to support the 2018/19 financial year with a further, though reduced, contribution from reserves.”

The review team concluded that the council’s latest financial plans are “reasonably credible, robust and theoretically deliverable”.

Mark Rogers. Photo: Birmingham City Council, Flickr

However, it raised doubts over whether all of the proposals are achievable, including organisational reforms plus earmarked savings from adult social care, homelessness and the council’s outsourced ICT contract.

In his letter, Crabtree also alluded to the departure of chief executive Mark Rogers, which was announced last week.

The letter said: “A number of forthcoming changes to the corporate leadership team bring the risk of a ‘reset button’ being pressed once again which could lead to further delays in achieving effective managerial leadership team-working.”