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THE BIRMINGHAM BUDGET 2013/14 AND TO 2017

CONSULTATION AND DEBATE

Peter HayStrategic Director Adults and Communities

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Our controllablebudget

Where Government Grant Cuts Have Fallen

Two Year Spending Power Reductions compared with Deprivation Levels

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5

10

15

20

25

30

35

40

45

50

0 2 4 6 8 10 12 14 16

Two Year Percentage Reduction in Spending Power

Ind

ex o

f M

ult

iple

Dep

riva

tio

n 2

007

Birmingham

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

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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

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By 2016/17 the combined impact of rising costs and reducing grants mean that we need to make cuts of around £600m

-350

-250

-150

-50

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150

250

350

2010/11 Adj 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17£mill

ion

Grant Reductions Budget Pressures

£600m

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Funding and Pressures

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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

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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.

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

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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

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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

Service Categorisation

Fit for purpose

Fit to outcomes

De-commission Or near-zero cost solution

“Lite” review• Small efficiency target• Invest?

De-commission Or near-zero cost solution

“In depth” review• Efficiency target• Invest?

Downsize service• Savings target• Statutory minimum?

Re - commission• Savings target• Statutory minimum?• Social enterprise?

Budget Reduction Proposals

Supported by Service Factsheets

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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

Development and Culture 3.7 1.6

Local Services 28.3 13.6

Service Reviews 9.8 9.8

TOTAL 109.9 70.6

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• 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?

OUR APPROACH

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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

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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

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