Birmingham’s voluntary sector support body has advised charities to review future income streams and council-funded work after the city’s local authority declared itself in financial distress.
Yesterday, Birmingham City Council, Europe’s largest local authority, issued a section 114 notice stating that it has insufficient resources to meet its expenditure commitments from its income and must stop all new spending except vital and statutory services.
Birmingham Voluntary Service Council (BVSC) said that it is too early to know what this will mean for council-funded charity services in the area, but warned of possible “knock-on pressures in the system as public spending priorities shift”.
Possible ‘knock-on pressures in the system’
In an X post, BVSC chief executive Brian Carr said that it is impossible to know the immediate and longer terms effect this could have on council-funded charity services at this stage.
“Our current understanding is that existing commitments and contracts will continue to be honoured, although recently committed spend is likely to be reviewed. The council’s leadership has indicated its intention to put in place a framework of controls whilst ensuring that key services to children and vulnerable people are not affected,” he said.
“Not all council-funded voluntary sector activities will be affected immediately (or at all) by this decision, so it’s important to continue with business as usual until the picture becomes clearer. Nonetheless, we all of course share concerns about how things will develop in the future for the city and Birmingham’s residents – many of whom are recipients of voluntary sector services. There is of course the possibility of knock-on pressures in the system as public spending priorities shift.”
‘Review future income streams’
Carr advised voluntary organisations whose work is funded by the council to “liaise with their council commissioners around any likely implications for current and future budgets”.
“It would also be prudent – as always – to review future income streams and any council-funded work that’s in the pipeline, in order to model and plan for different eventualities,” he said.
“The council will, necessarily, be looking for as many ways as possible to help it move out of these financial difficulties and into greater stability. We must remain focused on articulating the essential role the city’s voluntary sector plays, both in providing cost-effective solutions to social and financial challenges, and in delivering essential services to vulnerable people during times of crisis.
“We have always been at our strongest and most effective when we have pulled together with each other and with our public sector partners in pursuit of the common cause of better outcomes for the people we all serve.”
£87m financial gap
In an online statement, Birmingham City Council said that it has an in-year financial gap in its budget of around £87m.
“In June, the council announced that it had a potential liability relating to equal pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month,” it wrote.
“The council is still in a position where it must fund the equal pay liability that has accrued to date (in the region of £650m to £760m), but it does not have the resources to do so.”
This, the council said, means that it will “tighten the spend controls already in place” and that all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately”.
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