BIRMINGHAM City Council is facing a £21 million ‘black hole’ which could put key services at threat if not tackled it has emerged.
The pressures come after the outgoing Conservative-Lib Dem-run council passed a budget with some £112 million cuts in February.
But the Labour administration, which inherited the accounts following May’s local election, claims that many savings were outlined, with no detail on how they are to be achieved leaving deparments facing an over spend.
They also claim that further costs, such as interest on PFI payments and the rising demand for welfare and care services, were not accounted for.
But Conservative opposition leader Mike Whitby, defended his last budget and pointed out that there were always budget pressures, but he successfully dealt with them during his eight years in charge.
Of the total, £14 million of the pressures are on the Children, Young People and Families budget which is funding council owned schools, youth services, children’s centres and most crucially children’s social care.
Pressures highlighted include the increase demand for children’s care, the failure to recruit enough foster parents to move children out of expensive residential care homes and a failure to consider index linked price increases related to PFI payments on school buildings.
The council is optimistic that £3.2 million owed to the city in set up costs for Academy schools will be covered by the Department for Education later this year.
Labour deputy leader Coun Ian Ward said that the Tory-Lib Dems had made a series of wrong assumptions, including that levels of people needing care services or welfare would not rise this year – despite the ongoing austerity.
He also said they had deferred unpopular proposed cuts from last year, such as to the council owned Shelforce manufacturing firm which employs disabled people, the Connexions careers service and youth centres, without budgeting for them.
And he seemed to set the tone for series of unpopular cuts, which he blames on the Conservative-Lib Dems.
He said: “We feel it is important that the public know exactly where we are with the budget cuts that were implemented without solid plans for how they could be achieved.
“It is now up to the new Labour-led council to plug holes it did not create. We will do our best but this is a massive challenge – further black holes could very easily appear as the year progresses.
“The remainder of the year will undoubtedly be difficult, but to protect the interests of the most vulnerable in the city, we will do all we can to ensure measures are put in place that cause the minimum impact possible to the services we deliver and the quality of life enjoyed in Birmingham.”
Coun Whitby said that his budgets were always balanced and under his financial stewardship the council achieved a triple A rating from finance ratings agency Moodys.
He said: “It’s a pity and very sad that the Labour government left a massive hole in the national finances, and indebted future generations for decades to come.
“However, here in Birmingham over the last eight years, we have a record of balancing our budget; keeping Council tax low; directing extra funding over the lifetime of our administration to the caring services; and ultimately increasing satisfaction levels to their highest for some time.”
He said that he inherited a similar ‘black hole’, this time worth £32 million, when he took over from Labour in 2004 and managed to balance the budget.