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Birmingham: why the city with a troubled past has a bright future

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LGC’s essential daily briefing.

When Dawn Baxendale takes the helm at Birmingham City Council in April she will be the fourth local government big-hitter to tackle the role in as many years. In an interview with LGC just before Christmas, Ms Baxendale said she was “realistic” about the scale of the challenge she is taking on and stressed there was no quick-fix.

The council’s problems date back a number of years. The 2014 review by Lord Kerslake painted a picture of an organisation that too often saw itself as a victim, had a poor track-record for partnership working externally while even internally departments sometimes struggled to co-operate. The review itself was ordered in the wake of the Trojan Horse affair, when Islamic extremists were accused of trying to take over some of the city’s schools. For the government at the time this was the final straw following years of concern about the council’s finances, the quality of its children’s services and the city’s economic underperformance.

The Kerslake review put the council’s predicament down to a failure of members and senior officers, under successive administrations, to grip “some very significant issues, such as children’s services, waste management and equal pay”. “Instead there have been a series of short term financial fixes and annual salami slicing of services that have kicked the can down the road,” Lord Kerslake said.

Tackling these issues, along with setting a balanced budget, remain top of the list for the incoming chief executive. However, that is not to say there has not been progress, some of it significant, in the three years since Lord Kerslake’s review was published.

Children’s services

In May 2016 the council announced plans to place its children’s services, which had been judged failing for nearly a decade, into a trust. The Birmingham Children’s Trust is due to go live in April after operating in shadow form since April 2017. It has a highly respected chair in Andrew Christie and chief executive in Andy Couldrick and the hope is that an organisation solely focused on children’s services will be more successful at driving long-term improvement. There are already encouraging signs: following a visit in June Ofsted inspectors concluded the council had made “notable progress” in improving services.

Waste management

Interim chief executive Stella Manzie was too polite to say so in her recent interview with LGC, but there is no doubt that reaching agreement with the unions over the reform of the waste management service during her stint has removed a significant job from Ms Baxendale’s to-do list. By almost all accounts, reform of the service was badly needed but it was an issue that successive administrations had failed to tackle and without resolution would have left the council open to fresh equal pay claims.

That is not to say the council’s handling of the reform was perfect; indeed it provoked a series of walk-outs that completely disrupted the service for months on end. In many ways events over the summer offer a lesson in how not to manage an industrial dispute: the then council leader John Clancy (Lab) agreed a deal to end the strike which went against officer advice, prompting the council to go against the deal and issue redundancy notices anyway before the unions won a high court injunction suspending them.

The final agreement with unions, reached in November, will realise annual savings of £3m, significantly less than the £5.2m originally planned through the reforms. There must also be a question over whether, had the council compromised sooner, some of the £6m cost of the strike could have been avoided. There is also the matter of implementing the new model for the service, which involves new roles for the 113 employees previously at risk of redundancy. Nevertheless, this is a major battle Ms Baxendale will not need to fight on the road to reforming the council.

Equal pay

The Kerslake review found that while other councils had dealt with claims arising following the 2003 amendments to the Equal Pay Act 1970, Birmingham had “deferred” addressing issues over equal pay claims until the problem “became almost unmanageable”. Though it is now being tackled head-on, the council’s most recent audit report noted that the settlement of claims “remains an issue” with “uncertainty” around how much must still be paid out and when having an impact on the management of the council’s reserves. At the beginning of 2017-18 the council had £145m set aside to fund known equal pay claims, a significant reduction from £303m two year’s previously. In addition it had £101m in non-earmarked reserves and a further £373.5m in capital reserves which can also be used to fund equal pay claims, but doing so would add further pressure on the council’s finances.

Setting a balanced budget

This is one area where the challenge has definitely grown over the last few years as successive budgets have failed to deliver the planned savings, culminating in auditors issuing an adverse value for money conclusion on the council’s 2016-17 accounts. The failure of planned savings programmes in health and social care and workforce were central to the derailing of savings plans that year and the council’s £30m overspend on its £835m net revenue budget.

On the former, the councils 2016-17 budget had assumed £20m of savings would be realised through new ways of working with the NHS as a result of the sustainability and transformation partnership. These savings, branded “flawed and unrealistic” by the improvement panel, were not realised. However, auditors concluded that going into 2017-18 the risk of savings planned through working with health partners not being realised had been mitigated. In her interview with LGC, Ms Manzie said a lot of effort had gone into working with health partners during her time at Birmingham.

Though the council has reduced its workforce by more than a third since 2010 it must go further if it is to find the £171m of savings required by the end of the decade. A major contributor to this was due to be a workforce restructuring programme, known as the future operating model, launched by the council in late 2016. If fully implemented this will see support services, which currently account for 30% of the council’s workforce, brought out of individual directorates into a central function and consolidated to between 15% and 20% of the workforce, bringing it more in line with other councils.

The model also plans to streamline management arrangements so there are a maximum of five levels between the chief executive and the front line. A review of the council’s structure found in some cases there were currently nine levels.

However, the timetable, which included the realisation of almost £15m of savings in 2017-18, always appeared ambitious and its implementation is way behind schedule. Leader of the council’s Conservative group Robert Alden attributes the failure to introduce the model so far to “consistent weak management” and the repeated failure to take or implement decisions within agreed timelines with no consequences. “All of that weakens confidence in lower level staff of the ability of the organisation to actually change which weakens their desire to deliver the change that they are charged with,” he said.

Ms Manzie made a similar point, describing one of the council’s major challenges as “consistency” of approach, both internally and in working with partners.

Can Birmingham be turned around?

One of the questions most often asked about the city council is whether, as the largest council in the country, is it just simply too big to operate as a single organisation? There is certainly a widespread feeling amongst members and officers that the council’s size and the city’s status nationally means it attracts more scrutiny than it otherwise would. However, from Lord Kerslake to Ms Manzie the resounding answer has been ‘no’. There is certainly no appetite amongst local politicians to break up the council, which serves a city with a powerful sense of identity.

Many view this sense of identity as one of the council’s great strengths. Ms Baxendale has identified that the combination of this existing pride in the place and the prospect of the Commonwealth Games in just under five years time, could provide the focus needed for all parties to pull together.

Senior figures locally are also at pains to point out that despite all the focus on Birmingham’s challenges, the council and the city have had many successes in recent years. The number of cranes on the city’s skyline is testament to the amount of inward investment the city has attracted, including HSBC’s new UK headquarters, while the council is building significant numbers of new homes.

In addition, while the national context for local government as a whole has never been more challenging, the introduction of all-out elections in Birmingham this May, with the promise of four years of relative political stability, provides perhaps the best opportunity the council has had since government intervention to put to bed for good some of the issues that have dogged it over the past decade.

Sarah Calkin, deputy editor

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