Birmingham council needs to make MORE huge cuts and find extra £60m 'urgently'

Birmingham residents already facing massive cuts to council services alongside a 10% hike in council taxes are today warned they face even more misery - as city commissioners demand another £60 MILLION of cuts to be found urgently.

The city council will be plunged into a fresh financial crisis by the autumn, irrespective of who wins the General Election, unless it identifies a new batch of cuts, lead commissioner Max Caller has warned. These additional savings will be on top of those already made or planned.

The extra cuts must be lined up ready to kick in alongside already agreed savings next April. The pain won't end there either - with more cuts to come the year after.

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The revelation will be a massive blow to campaigners trying desperately to save already threatened services including day centres, early help projects, essential children's services, youth centres, libraries and weekly bin collections, all set to be axed in part or entirely over the next 12 months.

In a stark warning to next week's meeting of Birmingham City Council's Cabinet leadership team, Caller reminds the council that a £1.25b billion Government bailout, set in part against a £750 billion fire sale of property and land, will only happen if they meet their savings promises.

"There is no room for mis-steps and delay", he warns. "If the council does not increase the pace and focus on this task we are concerned that it will be in a real financial crisis in the autumn, similar to 2023," he warned. "There is scope to transform services and make significant efficiencies, but only if work is undertaken now."

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He says the council must use the summer to identify "credible savings." But to pile on more misery, he adds that the council continues to face rising demand for help and services, and that the 'extremely challenging' public sector financial picture will also affect the situation, "irrespective of the results of the general election."

"There is every possibility that the budget gaps in future years could grow. Against this backdrop, all capital and revenue expenditure undertaken by the council must be both affordable and necessary. This includes development projects planned by the council."

The commissioner's comments were 'truly shocking' said Councillor Robert Alden (Con, Erdington), leader of the Conservative opposition. “The scale of the failings of political leadership from Birmingham Labour has ceased to be a surprise to anyone connected with the city, but even by their own appalling standards, to be yet again in a position where they have to be publicly warned about the urgency of the situation and their lack of progress is a truly shocking state of affairs."

In her financial update to the Cabinet, meeting at 10am on Tuesday June 25, the council's director of finance Fiona Greenway fleshes out the dire situation facing the council. She says a failure to achieve all its savings and meet its target on asset sales would leave the council having to borrow instead 'at a penalty rate'. It would then be on the hook for increased interest charges and risk a bigger revenue gap in future.

Hopes that a future Government might go easy on the council and top up the hand-out should be resisted, she adds. Any future requests for exceptional support would be "scrutinised and challenged" by ministers, whichever party is in power, and by commissioners. "All steps must be taken to balance the 2025/26 and 2026/27 financial years within the council’s own means," she says.

Her report sets out the current financial situation and it makes for bleak reading. She reminds councillors that they have signed off £149m of cuts this year, some of which it is currently consulting on, but that only tells half the story. The council has also got another £239.8m deficit this year that is being will be plugged with some of the 'bridging loan' of exceptional financial support.

The huge gap has been built up over several years due to a combination of inaccurate financial planning, poor financial management and control, and using reserves to mitigate deficits, she said. "There is no possibility to entertain an overspend (this) financial year," she adds - so the council must live within its means, deliver the planned cuts and persist with non essential spending controls.

Another pot of the exceptional financial support money will be used to meet the costs of making hundreds of council staff redundant, says her report. The final, and biggest, part of the EFS cash is set aside to meet historic and future equal pay settlement costs, previously estimated to amount to as much as £760m.

In her report Greenway says an estimated £815.3m has been set aside - considerably more than the original estimate - 'accounted on a risk weighted litigation liability basis'. But she adds: "All steps must be taken where possible to explore mitigations to address the overall value of potential equal pay liabilities through the use of settlement schemes."

The situation won't ease next year, when the council will have a budget gap of 'at least' £143.7m. Savings of £76.3m have already been planned in, another £7m have been identified but that leaves £60m still to find, she added.

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