In November last year the Council published a 66 page Budget Consultation document. It proposed ‘savings’ of £50m in 2019/20. It will increase in the years after that, rising to ‘savings’ of £86m in 2022/23. These reductions would be achieved by a combination of efficiency savings and cuts in services. Following the consultation the total ‘savings’ in the 19/20 budget were reduced to £46m.
On 26 February, two months after the Consultation closed, the full Budget Financial Plan was revealed at the Council meeting. The Financial Plan is 347 pages long. It gives some more information about the proposed ‘savings’. 66% of the £46m reduction in 19/20 comes from service delivery. 20% comes from job cuts, which will save £9.2m in 19/20 (p40).
‘Since 2010, the Council has reduced the size of its workforce by around 48% (a reduction of 12,000 jobs) and anticipates a further reduction of up to 1,579FTE staff by 2022/23, with up to 1,095 FTE anticipated to exit the organisation in 2019/20.’ (p36)
According to the Plan the reductions are ‘after consulting with staff and Trades Unions.’
Cuts that hit the most vulnerable
To understand the potential impact of the ‘savings’, the key document is the High Level Initial Cumulative Equality Impact Assessment. This is a 31 page report which is Appendix 3 of the Financial Plan. It assesses the proposed reductions against a set of equality criteria such as age, disability, ethnicity and gender. Though they don’t include social class or measures of poverty, even though the cuts in services and jobs hit the poorest hardest.
Here are just two illustrative examples of the cuts in services. The report acknowledges that there are a number of ‘proposals that have a high risk of impacting on older people’. One proposal is to save £216,000 in 19/20 by ceasing to fund the Legal Entitlement and Advice Service, which delivers independent advice relating to welfare benefits, debt management and employment. ‘By the very nature of the service it is accessed by some of the most vulnerable people of Birmingham.’ (p16).
The total saving in provision for Children and Young Persons savings for 19/20 is £3.5m. It includes cutting back the Travel Assist service.
‘Travel Assist provides a variety of transport options to over 4,250 children on a daily basis, with an additional 1,500 receiving bus passes and has an overall budget of £18.4m for 2018/19. The majority of the children using the service have requirements related to SEND but the service also supports looked after children; children in temporary accommodation and other vulnerable groups.’
The ‘savings’ will be £1.7m in 19/20 rising to £2.5m in 20/21. They will be at the expense of some of the most vulnerable children and young people in the city, with their families, and especially mothers, left to try and pick up the pieces.
The root cause of the savage year on year cuts in Birmingham’s social services is of course the ruthless austerity policy of the Tory government, and the solution is a change of government. Many people will agree, but will also say surely if the Council has to make cuts it shouldn’t be choosing ones that hit services needed by some of the most vulnerable people and families in the city.
The consultation was a sham because it wasn’t about the whole Budget, only 5% of it
The Council leadership said ‘The purpose of this consultation is… to invite the public and partners to consider these savings proposals, provide feedback and, if they wish, make alternative suggestions.’ (Report to Cabinet 13 November 2018). But how can we make alternative suggestions if we aren’t given the full picture of the total spending plans? This is why the consultation was a sham – it wasn’t a consultation about the whole Budget, only about the Council’s planned cuts, and they represent only a tiny part of the total Council Budget. The Council’s total Controllable Expenditure – the amount it can choose how to spend – is £1.1billion. The £46m planned savings amount to about 5% of this sum.
There is a fundamental democratic right being trampled on here – the right of the citizens of Birmingham to know exactly how the Council they elected plans to spend their money on their services, and to be consulted about it. The issue at stake here is the power of knowledge and who possesses and controls it – and it isn’t the citizens of Birmingham.
Do the Council leadership really believe that if they had consulted on the whole 100% of the Budget, not just the 5% they chose to tell us about, the citizens of Birmingham would have said yes, you have got it right, these are the services you should cut?
So the big question is, what are the Council leadership’s plans for the remaining 95%? But on that there wasn’t a word in the Consultation document. They kept them secret until after the Consultation finished, when they published the Financial Plan.
The Financial Plan is 347 pages. It is not written in order to make it easy for citizens to make sense of. The Council could have also published a short easy-to-read summary, similar in format to the Consultation document, but it hasn’t.
To find out about the Council’s total spending on services you need to go to Appendix J on page 161. Here are the figures for Total Net Expenditure on Services: 18/19 £864.785m; 19/20 £848.910m – a reduction of about £16m.
By far the biggest area of spending is the Health and Social Care Portfolio. For 18/19 it is £336.232m, which is about 39% of the Total Net Expenditure on Services. And for 19/20 it is £325.706m, which is about 38% of the Total Net Expenditure on Services.
Social care is the Council’s biggest service expenditure – but what is it spent on?
But this invites another question: what is this massive sum actually spent on? On this the Financial Plan is silent. There is not a word of information in its 347 pages on what the Health and Social Care Portfolio budget was spent on in 18/19 or what it will be spent on in 19/20, with the exception of the five items of spending, adding up to £11.394m in 18/19, out of which ‘savings’ of £1.980m will be made in 19/20. (You can find these conveniently listed in the Saving Proposal Factsheet Adult Social Care and Health.)
So we are told what some 3% of the Health and Social Care budget is spent on, but this leaves about 97% – £334.838m – publicly unaccounted for in the Financial Plan.
To find the answer to what the 97% of the Health and Social Care budget is spent on you need to go to the minutes of the Health and Social Care Overview and Scrutiny Committee meeting on 20 November 2018, where you will find the Report of Cabinet Member for Health & Social Care Councillor Paulette Hamilton. In it she says:
‘The total budget in 2018/19 for the portfolio is £336.1m. […]
59% of the net total budget is allocated to external packages of care.
9% is spent on specialist care services.
11% is spent on assessment and support planning (Social Work).
7% of the budget is spent on Supporting People.
14% is spent on commissioning and other services.’
So 59% of the net total budget for the portfolio is allocated to ‘external packages of care’. That is about £200m – not far short of a quarter of the whole Council budget of £855m.
Private care businesses profit from the Council’s spending
What are these ‘external packages of care’? The report doesn’t say. But what is being referred to here is what the Council spends in the local social care market. It is easy to overlook the size of this section of the local economy. Figures aren’t available for Birmingham but they are for the West Midlands: 165,000 workers employed in the social care sector. According to Social Care as a Local Economic Solution for the West Midlands (2017, p15), of these 77% are employed in the private sector and 7.5% directly by local authorities.
Many of those in the private sector will be employed by private providers contracted by Birmingham City Council. Many will be working in care homes – there are about 350 care homes with contracts with BCC. (You can find a list of names on the BCC website.) Others will be providing domiciliary care – care in the home.
This raises a whole series of unanswered questions, including:
- Who are the providers?
- What are the contracts?
- What are the profit margins?
- How much do they pay their employees?
The adult social care market
Thatcher created a lucrative new market in social care by forcing local authorities to spend 85% of their social care budget in the private sector, decimating local authority provision. This is what The failure of privatised adult social care in England: what is to be done?, a 2016 report by The Centre for Health and the Public Interest, says:
[Under Thatcher social services] became a prime field for the new neoliberal policy of outsourcing public services to the private sector. […] the 1990 National Health Service and Community Care Act re-cast local councils as ‘enabling authorities’ rather than providers of care services, such as care homes. Funding for this new role was accompanied by a central government requirement that 85% of it should be spent on the ‘external’ purchase of care services from the private sector, so that local authorities began to contract with private providers to provide care rather than deliver it themselves.
Since then the transformation towards a market in adult social care has progressed steadily, with no attempt by any government to halt or reverse the trend. [ ….] In 1979 64% of residential and nursing home beds were still provided by local authorities or the National Health Service; by 2012 the local authority share was 6%; in the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%. This also means the bulk of the adult social care workforce – around 72% – is now employed in the private and voluntary sectors, along with another 14% employed by individual service users making use of ‘personal budgets’, leaving just 14% employed by local authorities.’
The prospect of exceptional profits attracted big equity investors into this new market. They bought up small providers and opened much larger homes for maximum profit, employing staff, largely women, on low pay. According to Social Care as a Local Economic Solution for the West Midlands
‘big care providers expect to offer 11% returns to investors (including costly debt repayments which often return to the parent operating company). The business models of the largest five residential care chain companies in the UK offer returns to investors that account for as much as 29p in every £1 of their costs – the second biggest drain on expenditure after wages.’ (p12)
But now the care market is in complete crisis because the savage government cuts in local authority budgets have squeezed the flow of profits to the care businesses. More than 400 care home operators have collapsed in the last five years, including over 100 in 2018 (Guardian 12 March).
Birmingham City Council should open the books
We don’t know what impact the private care homes crisis has on the businesses the Council has contracts with – and of course there is no mention of this in the Financial Plan. The first thing the Council should do is end the secrecy and open the books. It should implement the following Recommendations of the Centre for Health and the Public Interest report quoted above:
Where a public body has a legal contract with a private provider, the contents of that contract should be fully transparent.
The ownership details of companies providing public services under contract to the public sector should be available for public scrutiny.
Private companies in receipt of public services contracts should be domiciled in the UK and subject to UK taxation law.
Consideration should be given to giving local electorates powers to call to account any provider judged to be providing an inadequate service.
All providers should be required to comply with minimum standards of workforce terms and conditions and to accept collective bargaining rights.
There is scope to impose a contract on private companies that places an upper limit on what constitutes a reasonable return on investment. This scope should be exploited.
Getting the Market out of Adult Social Care
But the Council can do more than this. It needs to stop funding these big care home businesses by adopting as policy the final two Recommendations of the Centre for Health and the Public Interest report:
Organisations with a social purpose should be defined as the preferred providers of care and support services.
Steps should be taken to rebuild providing capacity in the statutory and not-for-profit sectors.
The aim should be, in the words of the model resolution published by Reclaim Social Care, the new national campaign, ‘Publicly, democratically run services, designed and delivered locally, co-productively involving local authorities, the NHS and service users, disabled people and carers’, in the framework of national standards.
The evidence is that what people want from social care homes is small-scale provision and personalised care:
The Care Quality Commission’s 2014-17 review, ‘The state of adult social care services,’ summarised its findings of comprehensive inspections into the sector across England. It found that:
High performing care providers were those that had the strongest cultures around person-led care, “where people are at the centre – treating people as people, as opposed to recipients of care.”
Community social care providers were rated the highest, with 87% of providers achieving a “good” or “outstanding” rating from the Commission.
Smaller care homes are rated better than larger ones: 89% of both small nursing and residential homes were rated good or outstanding, compared to just 65% of large nursing homes and 72% of large residential homes.
(Social care as a local economic solution for the West Midlands, p15)
Getting the market out of adult social care is supposedly already the policy of Birmingham’s Labour Council. Building a Better Birmingham: Labour’s Local Manifesto 2018-2022, published in March last year, gave the following commitment under the heading ‘A Rebirth of Municipal Socialism’:
We will re-state the case for the municipal provision of services in Birmingham, heralding a new age of municipal socialism.
And the Labour council in Birmingham will lead by example, calling time on the misplaced notion that the private sector always trumps the public sector by adopting a policy of in-house preferred for all contracts. (p6)
Since then there is little – in fact no – evidence of the Council pursuing this policy, in fact the opposite, most notoriously the privatisation of the 14 day nurseries. Of course getting the market out of adult social care would require the repeal of the 1990 Act which imposed the 85% private compulsion on local authorities, and Labour nationally should be giving this commitment loud and clear. But there are steps the Council could take right now.
The way forward is signalled by the Labour Party consultation report Alternative Models of Ownership, published in June 2017 and followed up by a conference headed by John McDonnell in 2018. It advocates, as well as nationalisation and municipal ownership, various forms of community-owned and worker-owned non-profit social enterprises, including co-operatives.
These are ideal models for personalised social care. The policy aim of Birmingham Council should be to stop giving contracts to for-profit care businesses as soon as feasible and save money by transferring them to small-scale care homes run as non-profit social enterprises owned by their workers and/or the local community. The Council should be developing plans now to support potential bidders.
Birmingham Against the Cuts
21 March 2019
BCC Budget Consultation document, November 2018. https://www.birmingham.gov.uk/info/20155/council_budget/1821/budget_consultation_2019
BCC Financial Plan, February 2019.
Report to Cabinet 13 November 2018
Saving Proposal Factsheet Adult Social Care and Health
Health and Social Care Overview and Scrutiny Committee meeting on 20 November 2018
Social Care as a Local Economic Solution for the West Midlands), Localise West Midlands and New Economics Foundation, 2017.
The failure of privatised adult social care in England: what is to be done?, The Centre for Health and the Public Interest, 2016.
Reclaim Social Care
Building a Better Birmingham: Labour’s Local Manifesto 2018-2022. 2018.
Alternative Models of Ownership. Labour Party, 2017.