Robbing Peter to pay Paul

Does Birmingham city council spend wisely? Alan Clawley thinks not.

The people of Birmingham are being asked for their views on next year’s Council Budget but in the consultation papers council leader Sir Albert Bore admits that roughly two thirds of its £3.4 billion annual running cost is “out of bounds” for public discussion. He says that he cannot control most of the Council’s spending and that the public can only discuss services such as swimming pools, child care, libraries and day centres. The paper doesn’t explain that by keeping corporate finance firmly under his control local front-line services, especially those not deemed ‘essential’ are being asked to take more than their fair share of savings.

Because the overall cost of running the Council will only be cut by 1.6 per cent this means robbing front-line services for which districts are mainly responsible to pay for corporate spending controlled by Sir Albert on capital projects decided at the centre.

Even when the economy crashed in 2007 the people of Birmingham were not asked if they would prefer the council to spend its money on front line services instead of new buildings. There was even a point when the Library of Birmingham could have been scrapped but we were merely shown the computer–generated images and asked to agree how wonderful it would be. It would, we were promised, create thousands of jobs and regenerate our city. It would have been churlish to turn it down but the public wasn’t given any choice.

Now the Council is saddled with long-term corporate debt at a time when austerity is demanded elsewhere. £190 million was borrowed for the Library of Birmingham, £600 million for New Street Gateway, £17 million for the Airport runway extension, £20 million to Warwickshire Cricket Club, £20 million for the National Indoor Arena. And now the Council offers £12 million to the Conservatoire in return for withdrawing its objection to the compulsory purchase of its premises so that the redevelopment of Paradise Circus can go ahead. What Sir Albert conceived as long ago as 1999 as a way for the Council to cash in on rising property values has become a drain on both the city’s budget and on that of central government via a £61 million from the Local Enterprise Partnership. In the meantime, the private sector waits for the property market to improve before committing itself to spending its own borrowed money.

What can be done to reduce the council’s mountain of debt? Selling debts to the private sector or issuing ‘Brummie Bonds’ may be a solution where there is a dependable future income stream. Swimming baths and leisure centres can be purely commercial but they could also be run by social enterprises that retain any surpluses in the local business. Where there is little or no income stream as with a public library the council hopes that charitable organisations will raise money and volunteers will keep running costs down. However,  the council’s ambitious fundraising plan was thwarted when the Library of Birmingham failed to raise £35 million in donations and no sponsors came forward with £10 million to have their name on the façade. Perhaps the Council should now consider letting large parts of the building to local businesses which are said to be desperate for Grade A office space.

As well as asking about day-to day services in his budget consultation Sir Albert should also ask the people of Birmingham whether they think the Council should reduce its burden of corporate debt. I suspect that he chooses not to do so because he knows very well what their answer will be.

2 thoughts on “Robbing Peter to pay Paul

  1. You forgot to mention that in addition BCC are reckoning to spend £30 million of other peoples’ money on extending the metro to Centenary Squ (clobbering the bus routes yet more in the process) not that I’m aware of any great demand for that “improvement” from the electorate here or anywhere. They have an application right now to which you can object up to next month if the notices in Broad St are to be believed.

    • Not sure how much of this is coming from BCC, I think it’s mainly from the LEP and Centro. That’s the same Centro who are currently proposing to cut the Ring and Ride service. I hear nothing against this from the Conservative and Lib Dem opposition.

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