City warns
of impact
on services
as grants
slashed

A leading council has warned that it will have to “decommission” a number of its services to make huge spending cuts because of a multimillion-pound reduction Government grants.

Birmingham City Council said its grant is to be slashed by £52m next year.

The Labour-controlled authority accused the coalition of introducing “significant levels of uncertainty and instability” at a late stage in its planning cycle.

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Over a six-year period from 2010/11, the authority said its grant from central Government is forecast to be cut by £332m but it will have to make savings of over £600m, almost half its spending.

“We will need to fund unavoidable cost increases due to the effects of inflation, the changing basic needs of our population, changes in legislation and financing costs.

“These are expected to cost £273m extra by the end of 2016/17, meaning that we will have to make savings of over £600m or more by that time – that’s around 48 per cent of the total spending over which the council has control,” the authority said in a statement.

The council said it had already implemented a savings plan and shed thousands of jobs.

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“By 2012/13 we will have delivered £275m of general fund savings with another £200m across the next two years followed with a further cut in excess of £100m over the following two years.”

It added: “The extent of the future financial challenge facing Birmingham will change the landscape of local government not only in Birmingham but nationally – we will have to decommission a number of services.”

A Communities and Local Government Department spokeswoman said: “New growth incentives will give successful councils a direct boost to their coffers, which could add £10bn to the wider economy.

“Birmingham is already getting Government help to grow its local economy, through a city deal worth £1.5bn, the New Homes Bonus, an enterprise zone and £22m in Growing Places Funding.

“In addition, the Government will support a third year’s council tax freeze – potentially worth over £200 to Band D residents.”