Iron Angle: Birmingham City Council's doom-mongers might not be bluffing
No show at this week’s Birmingham City Council meeting from chief executive Stephen Hughes. Probably enjoying a well-earned break at his barn conversion in France, lying down in a darkened room perhaps.
We were therefore spared any more of Mr Hughes’s increasingly apocalyptic warnings about the dire financial crisis the council expects to find itself in.
In what appears to be a series of carefully timed and crafted messages, Mr Hughes is preparing us for the end of local government as we know it.
Very old Iron Angle readers might be put in mind of Mona Lott from the wartime radio series ITMA: “It’s being so cheerful that keeps me going.”
Others should think Frankie Howerd in Up Pompeii: “Woe, woe, thrice woe.”
Either way, an interesting question arises. Is this a well-worn management strategy of talking up utter disaster in the expectation that the forthcoming public sector spending squeeze won’t be quite as bad as feared? Or is Mr Hughes right and is Birmingham teetering on the edge of a very steep precipice?
Certainly, he has been entirely consistent in the message. Not only is Stephen Hughes the most senior local authority figures to speak so openly about the impact government cuts will have on councils, he got there a considerable time before most of his colleagues.
Senior council staff were ordered to a seminar at the ICC months before the General Election to share Mr Hughes’s view that local government was pretty much doomed whoever formed the next government.
He has upped the ante since then, culminating in a dire warning last week that no council job is safe, presumably not even his own, and that politicians must think the unthinkable when it comes to reorganising services.
Based on announcements by Chancellor George Osborne, Birmingham City Council should expect to have to slash at least £230 million from its budgets over the next four years. That figure rises to £330 million when cuts in government grants are taken into account, but the final amount could be even greater.
No one can be certain what will happen until the Government’s comprehensive spending review is published at the end of the year, but it doesn’t take Up Pompeii’s resident soothsayer to predict very bad news.
To put this into context, the £330 million figure represents about one-third of the council’s annual revenue budget – a reduction unprecedented in modern times.
The scale of what is being asked for here is so vast that it is diffcult to get into perspective and bears out the forecast from Mr Hughes a year ago that the local government retrenchment will be far greater than anything imposed in the Thatcher years.
The impact on services will be skewed by the Government’s intention to afford schools and the education service some level of protection from cuts.
It is a given, also, that children’s social services, where the council is under a legal obligation to make provision, will not feel the full weight of the axe. Indeed, the notion a department that routinely overspends the money it is already allocated could fulfil its statutory duties with even less funding is risible.
As for adult social services, the council is already pursuing a vigorous policy to remove wherever possible elderly people from expensive residential care, leaving them instead to the lottery of care in the community.
The likely impact on other, less fashionable, services such as leisure, culture, transportation, planning and economic development is becoming abundantly clear.
Cabinet members responsible for these portfolios are already muttering, or getting their supporters to mutter, about the unfairness of rewarding year after year overspending departments with yet more money.
New cabinet finance member Randal Brew has his work cut out to produce a budget for the next four years that will pass muster among both sides of the ruling Conservative-Liberal Democrat coalition.
His cause won’t be helped by a less than convincing cabinet performance in which he mistook millions for thousands, adding: “I keep getting these noughts mixed up somehow.”
Oh dear.
It is becoming clear that the current financial crisis will change for ever the shape and size of local government in Birmingham. Services that can be farmed out to the private and voluntary sectors will be, leaving the council to transform itself into a body that commissions public services rather than provides them directly.
Mr Hughes and council leader Mike Whitby are beginning to get around to preparing the ground for the huge number of town hall jobs likely to be lost over the next four years.
I predicted last year that about 8,000 council jobs would disappear in Birmingham, a figure that predictably was described as nothing but ill-informed speculation by Coun Whitby.
That figure, given the scale of £330 million cuts, is beginning to look like an under-estimate and even Mr Hughes has admitted “we are going to be a much smaller organisation”.
A similar clear out in the public sector across Birmingham – a sector that has primarily been responsible for job growth over the past decade – will have a cataclysmic impact on the city economy, driving up unemployment and reducing Gross Value Added.
Multiply this across the country and it is easy to see why many economists fear that the imminent collapse of the public sector will drag the UK into a double dip recession. For the Tory hawks, however, this might be a price worth paying in order to deliver a hitherto unimagined axe to high-spending local government.
It is unlikely that the Liberal Demcorats, particularly those in Birmingham, would see it that way.
If anything is to threaten the stability of the city coalition, it will be the 2010-14 budget cycle rather than parochial “chattering class” issues such as the new library, the Olympic swimming pool and the Metro extension.
