Birmingham City Council 'can be great again' when it overcomes the 'self inflicted wounds' that have brought it down, some at the hands of council officers, the city's lead Government commissioner said today.
The council has fallen from being one of the best in the country to 'requiring intervention' because of a collective failure to heed warning signs over many years, said Max Caller, addressing the council's coordinating scrutiny committee. (Tuesday March 19) But he offered words of hope.
"This was a great council and you can be again. Your citizens and local government need you to get it right."
READ MORE: Broke Birmingham City Council's chief executive Deborah Cadman quits
On the city's damaging budget cuts ahead, including £149m of cuts this year, affecting children's services, libraries, bin collections, day centres, adult care, schools and kids with disabilities, he warned more would follow. Council tax bills are also landing with a 9.99% rise.
"There are no quick fixes," said Mr Caller. "You still have a gap in funding. This is a time to be frank and honest. Until you do that there will always be a feeling there is some clever wheeze that can be done. There is not."
He told councillors: "Every single line of the budget is going to be a challenge...but if you don't deliver these things you have to deliver something else. I hate the fact that you have got into this position, that you did not know the size of the gap you were facing on the day we arrived and had no plan for making these savings. Had you known that you might have avoided some of the things we are going to have to do."
He claimed questions being asked about the true level of equal pay liability likely to face the council were 'esoteric' and irrelevant - describing the council's potential liability figure of £650m-£760m as 'not a real number'. This was despite the equal pay crisis as a whole being cited repeatedly as a cause of the council's downfall.
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Mr Caller was speaking to councillors publicly for the first time since he was made lead commissioner of eight external experts sent in to oversee the city in early October. Secretary of State Michael Gove ordered them in after losing faith that the council could sort out a financial recovery over its declared de facto bankruptcy.
He revealed he had written an interim report to the minister in January, three months earlier than required, because he was so concerned that the council would not be able to deliver on its financial obligations. His letter and Gove's response were published for the first time.
He told the committee, chaired by Sir Albert Bore: "At the time I wrote the letter (dated January 9th) we had serious doubts about whether the council was going to be able to strike a budget that could be signed off. It is a major achievement of this council to have produced a set of proposals, no matter how unpalatable to you and your residents."
Many areas of the council were delivering in ways that 'every member can be proud of.' "There is no council in the country that is all good or all bad," he said.
But "what has happened in Birmingham is that you have really lost your way from being one of the best councils in the country to getting into intervention. You have been on notice of that for many years. It has felt as though the council felt it was too big to listen to other people, knew better and did not want to learn from good practice (elsewhere)."
The council had failed to learn from and internalise the lessons of the Kerslake Review of 2014 (prompted by previous council failures), he said. "Hard decisions have not been taken...officers felt it was never possible to tell bad news to senior management or councillors, and councillors felt they were never told the truth, resulting in a climate of mutual distrust and suspicion and occasional poor behaviour."
The rotating cast of statutory officers is particularly 'problematic', he said. He was speaking just days after chief executive Deborah Cadman announced her immediate departure. A constant churn of senior officers and a reliance on interims over the years was 'not the way to move the organisation forward," he said.
On Ms Cadman's departure, he said the job exerted a punishing toll, refusing to comment later on what he referred to in the meeting as 'conspiracy theories' about her resignation.
READ MORE: Five Birmingham budget shockwaves set to happen next from council tax to libraries
Councillors and officers needed to work together, he said. "We can do all the service rationalisation you like but if the culture doesn't change, if relationships don't change, if we cannot find a way of delivering mutual confidence and respect, it won't work.
"You don't have to be friends (councillors and officers). You have to be able to ask questions in the right way, treat each other with respect, and you will be able to take back this council from commissioners."
Some of the pressures on the council were not of its making and are facing 'every council in the land', said Mr Caller. These included the high costs of adult and child care placements; the high costs of energy; and that inflation levels tend to affect local authorities more than the general public.
Central government frequently played with the budgets of local government and that would not change, he warned. "In good years you get more, in bad years you get less. It doesn't make any difference who (which government) is doing it. You (local councils) are the control valve, the balloon."
But these general challenges were bolstered by "self inflicted wounds", he said. These included a failure to make savings as promised in budgets in previous years, the failure of the council's Oracle IT and finance upgrade, and its equal pay liabilities.
On equal pay, he said the crisis could be summed up as "the council had sorted out equal pay, and then the council took decisions to get itself back in a mess." He praised council leaders for sticking to their guns last autumn, against the advice of senior officers at the time and even when confronted with a legal notice from their own monitoring officer, to press for a job evaluation scheme that trade unions would back.
Doing so avoided 'industrial strife', he said.
On failed Oracle IT upgrade - 'not like plugging in Office 365'
The council's failure to properly implement a new finance and IT services system, dubbed Oracle, was another of its 'self inflicted wounds', he said. Currently expected to cost over £100m to put right, Mr Caller said it would be for a future inquiry to examine how that crisis came to pass.
"There is no point (now) in knowing who the guilty people are, but how will you get out of the position you are in, that's what matters." He said the system would have to be reintroduced 'from first principles' and was currently being 'reimplemented'.
He said of the Oracle situation: "This was not like buying Office 365 from Microsoft, downloading it, plugging it in and turning it on and putting your name in. It feels like you (councillors) felt it was a black box you stuck some wires in."
READ MORE: Warnings from distraught finance staff at broke Birmingham City Council 'ignored for a year'
"Until the system is sorted you will have disclaimed accounts and will not have financial control other than on a manual basis," he said. That in turn gives you other challenges to deal with, he added.
It also means the council has to rein back its ambitions, including to host events and do things "a city this size ought to be proud and able to deliver, but it cannot during the period of intervention."
Birmingham's business leaders were keen to help the council, he added. Among changes he was recommending was that the council no longer has a councillor chairing its statutory audit committee, but brings in an external expert to do so.
He was scathing about the performance of the council's audit committee over several years but said that the challenge of chairing an audit committee for a city with a £4bn budget needed expert support. "If you were a FTSE company you would be in the top 100...it is unfair to expect any member to chair a committee without the specialist skills to do it. It is not fair, and the constitution needs to be changed so it is an independent member, ideally from the Birmingham business community."
Conversations have already taken place, he revealed, and there were hopes that candidates would step forward prepared to act on a 'corporate social responsibility' basis, meaning it would be free or 'insignificant' to the council.
In his response to Mr Caller's January report, Michael Gove wrote: "I am concerned that the council does not have a strong track record of delivering savings or introducing innovation. It is essential that the council approaches the next year with a robust plan..You have my full support in taking whatever steps are necessary to drive the required improvements and I trust that council officers and members will continue to engage positively with you."
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