A finance report has revealed that Birmingham City Council is, two months into its fiscal year, already facing a £21 million ‘black hole’ which could put key services at threat if ignored.
The pressures come after the outgoing Conservative-Lib Dem council passed a budget with some £112 million cuts in February.
But the new 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. It also claims that further costs, such as interest on PFI payments and the rising demand for welfare and care services, were not accounted for.
But opposition Tory 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 funds council-owned schools, youth services, children’s centres and, 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 residential care 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’s Shelforce manufacturing firm which employs disabled people, the Connexions careers service and youth centres, without budgeting for them.
He seemed to set the tone for series of unpopular cuts, which he blamed on the Conservatives and Lib Dems. He said: “We feel it is important that the public know exactly where we are with the 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.
“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.”
Coun Whitby said that his budgets were always balanced and that he inherited a similar black hole worth £32 million when he took over from Labour in 2004.
He said: “It is with a wry smile I notice Labour use the term ‘black hole’. It’s a pity 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.”