THE BIRMINGHAM BUDGET
2013/14 AND TO 2017
CONSULTATION AND DEBATE
Peter Hay
Strategic Director Adults and Communities
1
2
3
Our controllable
budget
4
Where Government Grant Cuts Have Fallen
Two Year Spending Power Reductions compared with Deprivation Levels
50
45
Birmingham
Index of Multiple Deprivation 2007
40
35
30
25
20
15
10
5
0
0
2
4
6
8
10
Two Year Percentage Reduction in Spending Power
12
14
16
Reductions in Government
Funding
• Average for country £74 per person
• Birmingham’s :£149 per person
• If cut by national average :extra
£79.2m each year
THE CHALLENGE
• Over a six-year period, from 2010/11 to 2016/17, the
forecast total Government grant to Birmingham City
Council will reduce by at least £310m.
• At the same time, we will need to pay for unavoidable
cost increases, due to the following:
•
•
•
•
Inflation
Changing need in the city’s population
Changes in legislation
Financing Costs
7
By 2016/17 the combined impact
of rising costs and reducing
grants mean that we need to
make cuts of around £600m
8
Funding and Pressures
350
250
150
£million
50
2010/11 Adj
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
£600m
-50
-150
-250
-350
Grant Reductions
Budget Pressures
9
Resources Uncertainty
• Business Rates Retention Scheme - Apr 2013
• Formula changes in setting baselines
• Adjustments to Government overall funding levels
– School related overheads £7m (currently assumed)
– Early Intervention Grant – Nursery Places for 2 year
olds £8.2m (not currently assumed)
– Early Intervention Grant – General Top Slice £4.1m
(not currently assumed)
• Settlement - current rumours are it could be as late as
19th December
10
Council Tax
• February 2012 LTFP assumed 1.9% (+£4.9m)
• Currently assuming an increase within the previously
proposed 1.64% referendum limit * (£0.7m less)
• Council Tax Freeze Grant worth £2.6m for two years
(£2.3m less than LTFP, and £4.9m less from 2015/16).
• What should be the level of the Council Tax increase?
Note: Government has withdrawn draft regulations, guidance on the
calculation of the referendum limit % is not now expected until the
Finance Settlement.
11
If We Increased Council
Tax?
Every 1% rise only raises in total
£2.55m
Use of reserves?
Our reserves are modest for the
size of the organisation, and are
earmarked for specific purposes
Shared services and efficiency?
Entire back office costs less than
£100m
What have we done so far?
• £275m of savings in the last 2 years
– Reduced staff by 27%
– Transformed and streamlined back office systems
– No staff cost of living increases since 2010
• Reached the point where efficiency savings are not
enough
• Entire back office costs less than £100m
15
What else are we going to do?
• Extending last year’s savings proposals
• Setting out new proposals for this year
• A thorough review of all Council services, which may
end in some services being provided differently or
stopped altogether
16
Service Categorisation
Fit to outcomes
Re - commission
• Savings target
• Statutory minimum?
• Social enterprise?
“In depth” review
• Efficiency target
• Invest?
“Lite” review
• Small efficiency target
• Invest?
Fit for purpose
Downsize service
• Savings target
• Statutory minimum?
De-commission
Or near-zero cost solution
De-commission
Or near-zero cost solution
Budget Reduction
Proposals
Supported by Service Factsheets
2013/14 Savings Schedule
Directorate
Total
Savings
£m
New
Savings
£m
Adults & Communities
32.7
18.0
Children, Young People and Families
28.3
22.6
Corporate Resources
12.3
5.7
3.7
1.6
28.3
13.6
9.8
9.8
109.9
70.6
Development and Culture
Local Services
Service Reviews
TOTAL
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OUR APPROACH
• Immediate and pressing decisions for 2013/14,
but …
• …start planning and working now to deal with
2014/15 onwards
• Key questions:
– Are we doing the right things?
– Are we doing them right?
20
SERVICE REVIEWS 2013 → 2017
We will be conducting a thorough review of Council
services, and the contribution they make to local priorities
and legal requirements.
This is likely to result in decisions to provide some services
in new ways, and to de-commission some others
We will deliver savings from this process in order to
address the medium-term challenge, and also to realise
some benefits in 2013/14.
Total Budget Reduction expected from this
process by 2017: £197.6m
21
Process and Timeline
• Public Meetings and a disability forum
• Separate consultation on specific proposals
• Budget views on the website and on line survey
– closes 6th January 2013
• Budget and Council Plan 2013/14 reviewed by
Cabinet, Monday 11 February 2013
• Budget and Council Plan 2013/14 presented to
City Council Tuesday 26 February 2013
22
Your views
• Strategic Implications
• Commissioning and contracting
• Long term public finance in
Birmingham and what it means for
you
• Council will consider new
approaches
Discussion