Birmingham’s financial ‘black hole’ questioned – Part 2
Martin Mullaney was a LibDeb councillor until last May. He’s waging a campaign against the Labour administration’s claim that Birmingham finances were found to have a £21m hole in them when they came to power. He writes….
Birmingham City Council House
In part 1 of my investigation into the truth behind the Labour administration for Birmingham City Council claims of a £21million ‘black hole’ I showed the following:
a) The claimed “£21million black hole” is really a budgetary pressure.
b) That a £21million budgetary pressure at month 2 in Birmingham City Councils budget is nothing unusual.
c) That similar budgetary pressures have existed in month 2 in Birmingham City Councils budget and the previous administration has reduced these down to zero by month 12.
d) The new Labour administration is withholding from public scrutiny the end-of-year accounts for 2011/12. These are always made public at the end of June.
For this blog, I want to look a bit more closely at the budgetary pressures that the previous Conservative-Liberal Democrat administration inherited in June 2004 from Labour.
The below table shows the budgetary pressures for each month during the 2004/5 municipal year.
| Month in Financial year 2004/5 | Date the Cabinet report was presented | Month 2 revenue financial pressure (£millions) |
|
Month 2 |
Not reported |
|
|
Month 3 |
13/09/2004 |
21.9 |
|
Month 4 |
27/09/2004 |
27.2 |
|
Month 5 |
25/10/2004 |
31.8 |
|
Month 6 |
29/11/2004 (revised20/12/2004) |
22.5 |
|
Month 7 |
17/1/2005 |
21.7 |
|
Month 8 |
28/2/2005 |
8.7 |
|
Month 9 |
4/4/2005 |
8.5 |
Note that months 1, 10 and 11 are normally not reported. Month 12 is the end of accounts.
As you will see above, the financial pressure for 2004/5 reached a peak of £31.8million in month 5. The increase in predicted overspend was due to a Social Services department that was massively overspending. By the end of the year the account show that this had been reduced this to an underspend of £4.8million – this was done by careful budget monitoring and identifying where the Council budget was being overspent.
If you take into account inflation, the £31.8million budgetary pressure in month 5 2004, is worth £39.4million in today’s money
For Councillor Sir Albert Bore to complain about a £21m budgetary pressure in month 2 is complete nonsense. The previous administration inherited a £39.4m (in 2012 values) budgetary pressure from his administration. The previous administration dealt with it and reduced it to an underspend by the end of the year.
There was a slight spat at the Cabinet meeting on Monday, from Councillor Whitby concerning the press release on this issue and it was mainly directed towards the very competent, Deputy Leader, who took it with grace but did mention the history pre Labours Last return to office and the financial situation of the council left by the outgoing opposition.
Cllr. Whitby was concerned that the BBC had contacted him concerning the ‘Black Hole’ headline but as he hd not been provided with. Copy of the financial report he could not really comment.
With a £3.6 billion budget there will be pressures within certain portfolios such as Adult Social Care and Children’s services often when contingencies arise.
The art of the political accountant is to balance the budget and this is the reality that the new administration must work to.