Three major challenges as commissioners issue warning over Birmingham City Council

Government-appointed commissioners warned they could “exercise their full powers” if Birmingham City Council fails to overcome its financial crisis.

The commissioners, sent in by the previous Conservative government to oversee the council’s recovery, said in a new report that the challenge facing the Labour-run council “cannot be overstated”.

Its financial woes have already led to an unprecedented and painful budget being passed earlier this year, with libraries, bin collections, day centres, youth services, arts and culture, street lights and much more all impacted.

The first of the commissioners’ six-monthly reports, from this April, has now set out the pressing issues within Birmingham City Council (BCC) and how it can get back on its feet.

“The path to recovery is long but it is also narrow,” they wrote. “BCC must take very careful steps, in a deliberate order, before it first secures financial stability.”

They then warned what could happen if the council fails to get a grip of its enormous financial challenge.

“Commissioners have been provided with significant powers by the Secretary of State Michael Gove,” they wrote back in April.

“We have chosen not to use these powers to their fullest extent and instead aimed to steward the council and support it to take the right decisions.

“However, we stand ready to take a more interventionist role if the council fails to take the necessary steps.”

Mr Gove, the former Secretary of State for Local Government, said last year that the commissioners had powers to make decisions directly “should they deem that necessary”.

According to the commissioners, there are three particularly critical issues that need addressing during the next two years.

These were:

The equal pay liability and providing a fair settlement to workers.

The savings programme to reduce the council’s budget by around £300 million.

The council’s need to release assets to sell to realise £500m in the next 12 months and a further £250m in the subsequent year.

“If the council fails on any of these three challenges, BCC’s viability as an organisation will be in doubt,” the commissioners said.

“Achieving this will require iron-clad discipline and determined, ambitious political and officer leadership.

“If the will of the leadership falters on any of these points, commissioners will step in to exercise their full powers to secure services to citizens.”

Jim McMahon, a minister of state for local government, said in response to the report that he wanted a more equal relationship between the council and the new Labour government.

“Local councils must be fit, legal and decent,” he said.

“This government is committed to achieving that, which will require resetting the relationship between local and central government and establishing partnerships built on mutual respect, genuine collaboration and meaningful engagement.”

“There remains more that needs to be done,” he added. “But I am keen that the intervention moves as quickly as possible to a model based around a more equal partnership with the council, so that it is increasingly able to lead its own recovery.”

He also said he was grateful for the “significant oversight and direction” from the commissioners and requested they submit a second report in January, with an assessment of the council’s progress.

John Cotton, leader of Birmingham City Council, said he welcomed the report from the lead commissioner.

“We acknowledge that while progress is being made, there is much more to do in our ongoing efforts to ensure we become a financially sustainable, well-run council that delivers good services,” he said.

“We continue to engage constructively with the new government, and like councils across the country, are awaiting both this month’s budget settlement and a local government finance settlement later in the year which will set out a one-year emergency package of support for local councils.”

He said the government was also committed to a multi-year settlement following next year’s spending review, which could give councils “much-needed clarity” and allow them to plan for the future.

“Nevertheless, we face another very difficult budget, and it remains clear the pace of change must further increase, as further savings are identified, and we transform services,” he added.

“Our new managing director Joanne Roney is focussed on that challenge and there will be no let up as we work together to get the council back on track.”

Birmingham Labour councillor Jamie Scott said he was pleased to see the new minister wanted to work constructively with the council and have a “more equal relationship”.

The blame game which followed this year’s budget saw Coun Cotton take aim at “14 years of neglect from the previous Tory government” while Conservative politicians pointed the finger at mistakes made by the Labour administration at the council.