Iron Angle: City council's stand and deliver policy
Desperate times at Birmingham City Council, where the latest money-saving wheeze is to write a vaguely threatening letter inviting hundreds of firms to demonstrate that we’re all in this together and help the local authority out of its financial mess by sacrificing their own profit margins.
Cabinet finance member Randal Brew doesn’t put it quite like that, of course. But the result of his request to 900 firms, asking them to consider reducing the cost of goods and services they supply to the council by 15 per cent, will have a significant impact on businesses already struggling with the worst economic conditions for decades.
The big boys, the multi-nationals, will take it on the chin. They are in any case more able to cut costs in order to maintain lucrative council contracts.
It’s the smaller local firms, which the council claims it wants to do business with to stimulate the Greater Birmingham economy, that will suffer the most from what the Federation of Small Businesses has called strong-arm tactics.
If Coun Brew had written to me, I’d be tempted to return to sender along the lines of: “Why don’t you start cost-cutting at home by charging the 214 people who attended last month’s council junket to commemorate the visit of the Pope to Birmingham £50 each to cover the cost of the civic banquet they so clearly enjoyed? Then I might think about cutting my costs.”
Naturally, that would be the end of my contract with the council. A satisfying way to go, though, you might think.
Being an accountant, Coun Brew will have gone through the council’s books with a fine tooth comb and must know exactly where savings can be generated. He will also know that the scale of Government spending cuts facing Birmingham – £330 million – is so vast that the normal practice of slicing 15 or 20 per cent off each departmental budget simply won’t work.
A far more radical approach is required and it will be fascinating to see over the next few weeks whether the Conservative-Liberal Democrat coalition really is prepared to think the unthinkable, or as is perhaps more likely, reverts to form by doing the usual thing and slashing services indiscriminately.
One option that a number of Conservative backbenchers would like to be considered is the sale of some of the council’s more valuable assets, such as the NEC, ICC and Birmingham Airport. They argue, firstly, that councils should not be in the business of running exhibition centres and airports and, secondly, that it makes sense to cash in disposable assets at a time of unprecedented strain on the council’s financial resources.
As luck would have it, new accounting standards for local government forced the council to seek a realistic value for its 19 per cent shareholding in Birmingham Airport. District Auditor Mark Stocks has confirmed that, were the council to sell in the current climate, it could expect to receive about £67 million for its airport shares.
