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

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



Month 4



Month 5



Month 6

29/11/2004 (revised20/12/2004)


Month 7



Month 8



Month 9



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.