A move by Birmingham City Council to cut costs and protect jobs by transferring responsibility for school meals, cleaning and other education services to a social enterprise company has been scaled back after officials discovered a “magnitude of barriers” standing in the way of the idea.
Leaders of the city’s Tory-Liberal Democrat coalition decided a year ago that a novel way of delivering Government spending cuts would be by setting up an arms-length organisation called Services for Education, or S4E.
The aim was to save the council up to £10 million a year on back office costs, while also giving loss-making services a chance to survive by competing for business with the private sector.
But the failure to cover start-up costs as well as difficulties in protecting local government pensions for the 4,090 staff involved forced a re-think.
Only the schools music service, the health education services and the Learning and Assessment Service will now form S4E.
A substantial part of the £52 million external schools services – cleaning, caretaking, school meals, residential learning centres – will remain under council control for the time being, placing a question mark over their long term viability.
The Education Scrutiny Committee heard that council subsidies to the Outdoor Learning Service have been reduced to nil as part of the cuts package.
The decision led to a 146 per cent increase in charges to schools wishing to use council-run outdoor centres, resulting in a “very significant reduction” in bookings. The service has already lost 54 per cent of its market share this year to privately-run centres.
Meals, cleaning and caretaking, which was supposed to form the backbone of S4E, have seen an “alarming decline” in orders from schools because charges are seen to be too high, Strategic Head of schools Services David Perkins told the committee. He said “predatory” private firms were offering special deals that included providing new canteens for schools prepared to sign a long-term meals contract with them. This was something that the council had no chance of matching, and as a result was losing business at an alarming rate.
He added: “The service needs urgently to revisit its charging structures to schools, and potentially restructure itself to reflect this changing environment.”
Doubts remain over the likelihood of the slimmed-down S4E proving successful. The council is yet to identify any funding to meet the company’s human resources and IT requirements as well as insurance and bills for administrative services.
Although the council insists it is on course to deliver more than £220 million of savings this year, difficulties over schools services represent the latest setback for the cuts timetable.
Social services faces a £33 million funding gap after moves to scrap home care packages for adults with substantial needs were declared unlawful.