The Cut
“Our best estimate at present is that the city council will need to reduce its net expenditure by £330m over the next three to four years.”
Stephen Hughes, Birmingham City Council chief executive
The Background
As the Conservatives gather in Birmingham for their conference, they’ll find themselves in a city that mirrors many of their national problems. A Tory-LibDem coalition, it’s a council counting the pennies and bracing itself for the worst.
The West Midlands has already been badly hit by the economic slowdown – 60,000 private sector jobs, many in manufacturing, went in the decade up to 2008. And now another major employer, the public sector, is highly vulnerable to cuts.
The Analysis
Birmingham is the largest local authority in the UK, employing around 26,000 people directly with thousands more dependent on it for work.
Central government has already asked local authorities to find savings of £1.16bn this year. This Conservative -Lib Dem controlled council is planning to cut £330m in four years – that’s more than nine per cent of its budget.
So, it has to take £330m off its balance sheet to reign in its annual budget from £3.5bn to £3.17bn by 2013.
A Birmingham City Council spokesman also told CutsCheck that figure’s just a projection – it could be more or less. The spokesman also told us that “nothing has been ruled on or out” of the cuts programme. It says the majority of the savings will come from its core budget with £100m coming from “specific grants”. It wouldn’t tell CutsCheck what these were. It’s already put the 26,000 staff on notice that it may make changes to their contracts, which could include cutting their hours.
Birmingham says it has started trying to finds ways to avoid cuts, for example by generating money from the sale of assets such as old council buildings, and that old favourite, increasing productivity. It says these measures will save £90m per year, but it will have to find at least another £10m per year. It’s also looking at things such as using cheaper open-source computer software, saving money by cutting the cost of licensing expensive branded products.
Elsewhere, the city has already felt the impact of other government cuts.
The end of the Building Schools for the Future programme has seen 13 projects scrapped locally. The axing of another nine projects in the neighbouring borough of Sandwell even led to the defection of Tory councillor Elaine Costigan to Labour, in protest.
And West Midlands police says it needs to save £123m over the next four years – and is now considering making up to 2,250 people redundant.
On the plus side, a recent report noted that Birmingham is well placed to capitalise on its strength in the so-called ‘knowledge industries’ of universities and research which could still help shield it from the worst of the recession.
The Verdict
A 9.4 per cent budget reduction is pretty big – and its impact will be widely felt especially by the thousands who depend directly or indirectly on the council for their jobs. And this is just the first wave of cuts – even more are expected when the government’s spending review is published later this month. A recent blog from the council’s chief executive pretty much said it all: “I cannot promise that everyone will still have a job at the end of this period. We are going to be a much smaller organisation.”
CutsCheck is the little sister of the Channel 4 News FactCheck blog. We scrutinise public spending cuts and uncover the savings the government doesn’t want you to know about. We judge each cut by how much it will save and how many people it will affect. If you know of a cut we should check, email us at factcheck@channel4.com.
