Birmingham City Council held back on spending to prepare for cuts, claims Hemming
Jul 2 2010 by Jonathan Walker, Birmingham Post
A Birmingham MP has defended plans to slash city council spending by £300 million and said councils should have seen the economic crisis coming - and started to make savings in advance.
The drastic cuts were needed to help prevent Britain going bankrupt, said John Hemming (Lib Dem Yardley).
Speaking in the House of Commons, Mr Hemming made the surprising claim that Birmingham City Council had deliberately failed to spend money earmarked to cut unemployment, because it had been saving the cash to help it cope with government spending cuts.
He was referring to a scheme called the Working Neighbourhoods Fund, which has been highly controversial.
Birmingham received £155 million to cut unemployment but by the end of September 2009, mid-way through a three-year programme, £30 million had been spent and only £2.5 million of that on getting people into work.
Birmingham came under fire in the House of Commons from John Denham, Labour’s Shadow Local Government Secretary, who said the previous government had tried to help local authorities.
Mr Denham said: “We trusted local councils - Tory, Lib Dem and Labour. Yes, sometimes they let us down. I remember when the Tory-Lib Dem coalition in Birmingham failed to spend its Working Neighbourhoods Fund money; perhaps we should have realised that that was the shape of things to come.”
But Mr Hemming said: “The Opposition spokesman complained about Birmingham not spending all the money it had. Birmingham was well aware that financial difficulties were coming down the track and that spending all the money . . . was not the right strategy.
“It is worth keeping some few millions in the cocoa tin so that when we face the difficulties after the general election we do not end in such a mess that we say, ‘all the money’s gone’.”
He told MPs: “Birmingham made an initial announcement of £12 million savings. It is probably more like £20 million. Those figures can be worked out quite straightforwardly. They pale into insignificance when compared with what has to be saved over five years - £250 million to £300 million. That has to be planned for now.”
Britain had to spend less - and councils should take the blame if they didn’t save money, he said.
“That will reduce the deficit because we will spend and, therefore, have to borrow less money this year. That is not complicated ... it is appalling for local authorities to pretend that they did not know that cuts were coming down the track, that the country had a major financial problem and that they had to do something.”
But Labour MP Jack Dromey (Lab Erdington) insisted the Budget would be “bad news” for Birmingham.
He said: “Birmingham has great problems of multiple deprivation and high unemployment, yet, as a consequence of the Budget, it will see the biggest cash reduction-more than £12 million.
“It will have the largest cut in area-based grant in any local authority in Britain, at £8 million, and the seventh largest cut to the school development fund, at £633,000. That money was designed to help struggling schools to succeed.”
