Birmingham City Council's Tory-Liberal Democrat coalition is developing a dogged war of attrition, says Public Affairs Editor Paul Dale.

The generally held belief that it is inadvisable to fight a war on more than two fronts at the same time has been spectacularly challenged by Birmingham City Council's cabinet for most of 2007 - with little indication that next year will be any more peaceful.

During the past 12 months leaders of the Conservative-Liberal Democrat coalition have battled with a variety of high-profile and controversial issues, delivering on some fronts and failing on others.

On the plus side, adult social services was awarded two stars by Government inspectors and is now officially recognised as a good performer with promising prospects for future improvement.

The turn-around for a department that, three years ago, was categorised one of the worst anywhere in the country can hardly be over-emphasised. Additional money has been poured into social care by the cabinet, alongside a wholesale change in senior management.

This could have been done by the previous Labour administration, but it wasn't. And Labour in Birmingham wonder why it is staring at another four or five years in the political wilderness.

The housing department, another serial failure in 2004, also continues to improve thanks to substantial investment in modernising council houses and a shake-up in the repairs service. Market research carried out for the council suggests most tenants are now satisfied with the service they receive from the local authority.

Tory council leader Mike Whitby is quick to point to a number of national and international studies naming Birmingham as a great place to do business and a prime spot for inward investment from abroad.

Unfortunately for Coun Whitby, anyone who wanted to challenge that perception could point to other studies and surveys suggesting that Birmingham is being overtaken in the eyes of the public by cities such as Manchester, Leeds and Bristol as highly desirable places to live.

The Cushman & Wakefield survey, praised unstintingly by the council leader in 2006 when it described Birmingham as the best place outside of London in which to do business, returned in 2007 to haunt Coun Whitby by promoting deadly rivals Manchester above Birmingham in the pecking order.

There was a highly-embarrassing intervention by former Tory party leader Iain Duncan Smith, whose Centre for Social Justice report highlighted Birmingham as a city of unacceptable contrasts between the wealthy central business area and the outlying suburbs with some of the highest unemployment in the country.

The report also made a lot of complimentary points about Birmingham's economic renaissance, but Coun Whitby chose not to recognise the positive side in favour of an all-out assault. He authorised a council statement describing the findings as poorly researched and, in places, wholly inaccurate.

The reaction, or over-reaction some might say, seemed to capture the increasingly edgy atmosphere at the Council House in the latter half of 2007 as the cabinet became engulfed by the difficulties of meeting promises to deliver high-stakes projects. Three-and-a-half years into the life of the Progressive Partnership, the complexities of governing a city the size of Birmingham are beginning to have a wearying impact on the council executive.

Controversy surrounding the Governmentinspired single status pay and grading review, designed to iron out pay inequalities between men and women and blue and white collar jobs, came to a head in September.

Some 6,000 council employees, about 15 per cent of the non-teaching workforce, face pay cuts, in a few cases by more than £10,000 a year.

But about half the workforce, mainly women in low-paid jobs, will be better off and will also qualify for back-pay.

The first few months of 2008 are likely to see council HR officials dealing with hundreds, possibly thousands, of appeals against the new pay and grading system from disgruntled employees, while the likelihood of industrial action remains a possibility. More than 20,000 council workers are believed to have rejected the new contracts offered to them.

While trying to push through single status the cabinet has also been laying the groundwork for what's being described as a life-changing business transformation project. New IT systems and more efficient ways of working will deliver budget savings amounting to £10 billion over the next decade, including £66.5 million in 2007-08, it is claimed.

Staff will have to have a more "flexible" approach to work and be prepared to switch between jobs and departments, according to council chief executive Stephen Hughes.

Labour and the trade unions believe efficiencies on such a scale can only be achieved through wholesale job cuts. Cabinet human resources member Alan Rudge denies this, while Mr Hughes said recently that fewer than 3,500 jobs (out of 40,000) would disappear over the 10-year period and he believed this could be achieved gradually without compulsory redundancies.

Two of the council's biggest regeneration projects - New Street Station and the City Library - moved slowly forward during the year, but it is too early to be certain that either will be delivered in the form presently proposed.

Plans for the library, to be built in Centenary Square in an amalgamation with the Rep theatre at a cost of £193 million, were unveiled in October. The project is to be fully funded by the council, but assumptions in the business case are already being challenged by a scrutiny committee in what promises to be a dogged battle between the executive and backbench councillors during the first few months of 2008.

The £550 million redevelopment of New Street Station, the Gateway project, has become bogged down in a dispute between the Department for Transport and the council.

Coun Whitby's temper was tested almost to breaking point in the summer when senior Government figures began briefing the media about supposed gaps in the New Street business case. Officials at the DfT demanded more and more answers about the project, in particular evidence that the council had properly considered lower cost options before opting for the Gateway plan.

Dates for confirmation of the final tranche of funding came and went through September, October and November. It is thought likely that the Government will make an announcement in January, but whether New Street is awarded all of the funding being sought remains to be seen.

A clear suspicion remains among those close to the council leader that the DfT is intent on cutting the cost of New Street - something that Coun Whitby says would result in an inferior scheme and is unacceptable to the Gateway partners.

And lurking behind the scenes as we move into a new year, the matter of whether the people of Birmingham should be given the chance to vote to be governed Ken Livingstone-style by a directly-elected mayor. David Cameron believes they should, as do shadow Birmingham Minister and Sutton Coldfield Tory MP Andrew Mitchell and West Midlands Minister and Hodge Hill Labour MP Liam Byrne.

Coun Whitby does not believe in asking the people, and has described a petition demanding a mayoral referendum as "puerile".

Without doubt, 2008 will be every bit as challenging for the cabinet as 2007.