Lack of confidence council can balance books

The council signed off budget-saving plans in March including a 21% rise in council tax over two years

Commissioners overseeing Birmingham City Council's financial crisis are "not confident" in its current plans to balance the budget, a report has revealed.

The authority effectively declared itself bankrupt last September, and signed off widespread cuts and a planned council tax rise of 21% over two years in March.

But according to the report, commissioners "are not confident that the council can deliver sufficient savings to bridge the budget gap".

It recommended cabinet members agreed to accelerate savings targets, and stated the council "must now take every step required to live within its means".

Director of Finance Fiona Greenway, centre, speaking during a council audit committee meeting

The report will be discussed by the council's cabinet on Tuesday.

After issuing a section 114 notice last September, the council was attempting to make at least £300m in savings and sell assets worth £750m by April 2026.

However, director of finance Fiona Greenway, reported there had been an increase to savings targets for the 2025-26 financial year, which "only makes the challenge more difficult".

She also urged the authority to be cautious over a £220.8m forecast deficit in the current year since "there has been a historic tendency for the financial position to deteriorate" during the year.

For this reason, the council should tightly monitor all spending over the remainder of the year, and look further at adult and children's care, homelessness and street-scene improvements, she wrote.

The finance director recommended care packages over a certain weekly cost should be reviewed and approved by a more senior member of staff, for instance, and top suppliers' contracts be negotiated down.

Accelerated savings

To correct the projection, "an additional £11.982m of savings opportunities are being accelerated" from 2025-26 into the current financial year, the report stated.

It hoped this would reduce the risk of the financial situation worsening further, and reduce savings targets for future years.

However, the report's author also wrote it was unlikely the council would fully deliver on approved savings of £149.8m for the current financial year due to a number of emerging issues.

Protestors gathered outside Birmingham City Council budget setting meeting in March

'Not confident the council can deliver'

While the government-appointed commissioners welcomed "a broadly positive" performance between April and June, they were not confident the council could currently deliver sufficient savings.

"Commissioners are of the view the council does not have sufficiently robust plans to balance the budget in 2025-26 and subsequent years," a review included in the report stated.

In addition, it said £56.3m of newly identified savings for the next financial year were unlikely all to be delivered on time, as more work was needed on them .

"The current budget gap in 2025/26 is £195m and that reduces to £63m if all currently identified savings are approved and delivered (£56.3m new and £75.9m of savings previously identified)," commissioners said.

The council needed to communicate and reinforce the financial message and behaviour expected of all staff, commissioners said, adding they believed there were "more efficiencies to be found".

"A more fundamental transformation is possible and Oracle can be a real driver of savings across the Council," the review said, referring to the reimplementation of a a problem-hit IT system.

Commissioners warned against trying to deliver the £195m savings over a longer term, which would "prolong this challenging period".

Of 186 ideas suggested by staff, more than a third have so far been delivered or were being implemented, the report revealed.

Cabinet members are recommended to approve the acceleration of savings and agree outstanding debts of more than £25k of debts are written off.

The final budget is due to be presented in draft form in October for approval by March next year.