Brummies are set to face a 9.99 per cent rise in council tax for the second year in a row, according to a budget preview from Birmingham City Council’s finance chief.
That will come alongside budget cuts of £153 million as the council battles to balance its books. The savings required will largely fall on adult social care, children’s services and city operations and come despite a big rise in central government funding.
The council must now seek permission from the government to put council tax up by nearly 10 per cent for the second year running. It would mean council tax bills would have risen by a fifth in two years.
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Pressures around demand for children’s, adult social care and homeless support, inflation, pay rises and the costs linked to the chancellor’s hike in National Insurance payments all have to be accounted for in the coming months. An interim financial report from the council’s finance director Fiona Greenway starkly indicates the continued severity of the city council’s financial situation.
In her financial update report, due to be considered by the council’s cabinet next week (Tuesday January 21st), she writes: “This report assumes an increase (in council tax) of 9.99 per cent for the 2025/26 financial year, with an increase of 4.99 per cent forecast for 2026/27 and future years. The recommendation will be put forward to the City Council on February 28, 2025 for final approval.”
Commissioners overseeing the council, led by lead commissioner Max Caller, say the budget proposals for the year ahead have been helped by a ‘better that expected local government finance settlement’ from the Government. “This has enabled the council to propose a budget that does not require exceptional financial support to close the budget gap.
“The overall position set out in this report is of course dependent on the Government agreeing a ten per cent council tax increase for the second year running.” Commissioners say the council faces ‘a continued period of tight budgets’ and needs to focus on ‘establishing a modernisation programme and a pipeline of efficiency savings…commissioners remain concerned the council has not made enough progress in this area.”
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An outline of the savings that will be made by each directorate in the year ahead illustrate the depth and severity of the ongoing financial situation at the council. These will include:
- Adult social care – savings of £43m from budget of £469m
- Children and families – savings of £41.3m from budget of £383m
- City housing – savings of £18.2m from budget of £30m
- City operations – savings of £23.4m from budget of £203m
- Finance, people services, legal, governance, executives – savings of £11.6m from budget of £150m
- Place, prosperity and sustainability – savings of £4.8m from budget of £16m
- Strategy, equality and partnerships – savings of £1.6m from budget of £5m
The detailed budget will be revealed next month, when it will be considered by the Cabinet and then full council. Critical additional pressures on the council include:
- Increased costs of the increase in Employers’ National Insurance announced by the Chancellor in the autumn
- Increased social care costs as a result of a higher than forecast National Living Wage settlement
- A lower income from business rates due to a higher than expected number of successful appeals
In terms of incoming funds, the council says the Government indicated it would receive £114 million more than it expected to mostly via one off grants of £50m. These included £39.3m of recovery grant, £11.1m of children’s social care prevention grant and additional income from the ‘extended producer responsibility scheme’ of £15.2m. It is also in line for £10m compensation linked to the NI rise, and an additional social care grant of £11.6m.