Improvement panel warns council of "mammoth task" over £49m overspend

Birmingham City Council faces a "mammoth task" to balance its budget for next year, the independent panel overseeing its improvement has warned, after it emerged that the council is heading for an overspend of around £49 million this year.

The Birmingham Independent Improvement Panel published a letter to the Secretary of State for Communities and Local Government on 9 November, setting out the council's progress in the 21 months since the Kerslake Report.

Concerns over the budget

The panel's letter says the council has made progress in carrying out its improvement plans between April and October, but raises concerns about the slow pace of change in the council's organisational culture.

It draws particular attention to the serious overspend for 2016-17. The panel says the overspend results from flawed planning and insufficient delivery of the council's budget for the year, and that with very limited general reserves available, the task of preparing a balanced budget for 2017-18 could put the council's future success at risk.

An independent review

John Crabtree, who chairs the panel, said discussions with the council leader, cabinet members and the chief executive had shown they were actively engaged in understanding the challenge.

"Our discussions with the Leader, Cabinet Members and Chief Executive have demonstrated that they are actively engaged in joint working to understand and grip the full challenge now facing the council," he said.

Because the council needs to have complete confidence that next year's budget can be delivered when it is asked to approve it in March, the panel and the council have agreed to jointly commission an independent review of the 2017-18 budget. It will focus on the quality and robustness of the council's delivery plans across all areas of spending.

Children's services must not suffer

The panel is also concerned about the effect that tackling the financial problems could have on the council's wider improvement. Its letter stresses that the council must keep its focus on the improvement programmes for education and children's social care, including plans for a Children's Trust.

The council has published its own self-assessment of its progress, entitled Strengthening the Foundations, alongside the panel's letter.

How the panel came about

In December 2014, Lord Kerslake published an independent review of the governance and organisational capabilities of Birmingham City Council, the largest local authority in Europe. As well as recommending action by the council, he called for the government to appoint an independent panel to provide robust challenge and support.

The panel was set up in January 2015. Its members are John Crabtree, Frances Done, Keith Wakefield, a former leader of Leeds City Council, and Steve Robinson, a former chief executive of Cheshire West and Chester Council. Andrew Christie, the children's services commissioner for Birmingham, sits on the panel as an ex officio member.

The panel will report again to the Secretary of State on the council's progress, with a particular focus on the setting of the 2017-18 budget in March. With a large gap to close and little in reserve, the coming months will be a major test for the council's leadership.