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Giant council plans £16m in housing cuts amid funding crisis
England’s largest council landlord plans to save nearly £16m on its housing services budget over the next two years amid a wider £376m cost-cutting exercise.
Birmingham City Council has revealed the plans after issuing two Section 114 notices declaring itself effectively bankrupt last September.
In a new proposed budget plan, the council identified £6.2m of housing cost-savings for the 2024-25 financial year and £9.5m the following year. Among the other areas facing cuts are adult social care and children’s services.
The council is also planning a sale of assets worth £750m to tackle the crisis.
On housing, the council will look to save £1.4m by increasing service charges on homes, which it said have “not kept pace with inflationary increases”.
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Service charges will rise from April to ensure they are “in line with the existing policy of full cost recovery”, the council said.
It also aims to make savings of £3.3m through cutting roles across the council’s “housing solutions and support service”. As a whole, the council is planning around 600 redundancies.
The authority also aims to save £5m by taking property acquisition out of its “general fund” budget, with its Housing Revenue Account instead funding the purchases.
The cut-backs come despite Birmingham City Council last month committing to doubling its planned spending on its current housing stock over the next 30 years, to £4.58bn.
The bulk of the money from its ring-fenced Housing Revenue Account will be spent on making sure homes meet “statutory and compliance obligations”.
Last year, the Regulator of Social Housing found that around 23,000 of the council’s social homes did not meet the Decent Homes Standard. A range of serious health and safety issues relating to fire safety and asbestos were also found across thousands of homes.
A Housing Ombudsman report last year also identified “extensive failures”.
Birmingham City Council is planning to raise council tax by nearly 10% in each of the next two financial years to help balance its books.
A review of the plans by commissioners appointed last year to help run the authority said the council was in a “serious financial position” due to “past decisions” it had taken, including “failing to take proper corrective action”.
However, John Cotton, leader of Birmingham City Council, said the situation had been made “much worse” by the national crisis in local government finance due to austerity and underfunding. Other councils that have issued Section 114 notices include Nottingham, Croydon, Slough and Thurrock.
He added: “Birmingham City Council is facing a number of financial challenges and I want to apologise unreservedly for both the significant spending reductions and this year’s substantial council tax increase.
“We have no alternative than to face these challenges head on. And we will do whatever is necessary to put the council back on a sound financial footing.”
The budget proposals will go to the council’s cabinet on 27 February, then face a vote at a full council meeting on 5 March.
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