FINANCIAL PLAN 2019 - 2023 TABLE OF CONTENTS LEADER’S FOREWORD ........................................................................................................................ 2 CHAPTER 1: POLICY CONTEXT .......................................................................................................... 4 CHAPTER 2: FINANCIAL STRATEGY ................................................................................................. 10 CHAPTER 3: REVENUE BUDGET ...................................................................................................... 20 CHAPTER 4: SCHOOLS’ BUDGETS ................................................................................................... 57 CHAPTER 5: HOUSING REVENUE ACCOUNT .................................................................................. 61 CHAPTER 6 COMMONWEALTH GAMES ........................................................................................... 67 CHAPTER 7: CAPITAL STRATEGY AND PROGRAMME ................................................................... 72 CHAPTER 8: S151 OFFICER STATEMENTS ..................................................................................... 82 APPENDIX A: LONG-TERM FINANCIAL PLAN................................................................................... 84 APPENDIX B: REVENUE GRANTS ..................................................................................................... 85 APPENDIX C: RESERVES POLICY .................................................................................................... 93 APPENDIX D: BUDGET PRESSURES .............................................................................................. 100 APPENDIX E: SAVINGS PROPOSALS ............................................................................................. 103 APPENDIX F: BIRMINGHAM CITY COUNCIL WORKFORCE STRATEGY 2018 – 2022 ................ 147 APPENDIX G: COUNCIL TAX ............................................................................................................ 153 APPENDIX H: SUMMARY OF RESPONSES TO CONSULTATION ................................................. 154 APPENDIX I: FLEXIBLE USE OF CAPITAL RECEIPTS STRATEGY ............................................... 158 APPENDIX J: REVENUE BUDGET BY DIRECTORATE ................................................................... 159 APPENDIX K: HRA BUSINESS PLAN ............................................................................................... 163 APPENDIX L: CAPITAL POLICIES .................................................................................................... 164 APPENDIX M: PROPERTY STRATEGY ............................................................................................ 167 APPENDIX N: SERVICE ASSET AND CAPITAL STRATEGIES ....................................................... 171 APPENDIX O: TREASURY MANAGEMENT STRATEGY ................................................................. 186 APPENDIX P: TREASURY MANAGEMENT POLICY ........................................................................ 195 APPENDIX Q: SERVICE AND COMMERCIAL INVESTMENT STRATEGY ..................................... 205 APPENDIX R: CAPITAL RESOURCES ............................................................................................. 213 APPENDIX S: CAPITAL PROGRAMME ............................................................................................ 216 APPENDIX T: TEN YEAR SUMMARY CAPITAL PROGRAMME ...................................................... 221 APPENDIX U: DEBT REPAYMENT POLICY ..................................................................................... 223 APPENDIX V: PRUDENTIAL INDICATORS ...................................................................................... 229 APPENDIX W: PAY POLICY STATEMENT ....................................................................................... 234 APPENDIX X: FEES AND CHARGES ................................................................................................ 244 APPENDIX Y: GLOSSARY 347 1 LEADER’S FOREWORD This document sets out the Financial Plan for the City Council, outlining the tough decisions that have been made for the 2019/20 financial year and the vision and priorities that will inform future decisions and spending. It is clear that after almost a decade of austerity driven cuts, this continues to be the most challenging period in Birmingham City Council's history. Funding for vital services to support the people of Birmingham has been cut by more than £690 million since 2010. And we must now find further savings of £85 million over the next four years, including £46 million for 2019/20, taking the total annual savings over this 12-year period to £775 million. Over the same period, demand for many services (especially adult social care) has grown and inevitably that has meant tougher budget decisions than ever before. It was against this backdrop that, in November, we launched our Budget Consultation and I would like to thank everyone who responded to our proposals. As you will see from the programme outlined in this document, we did listen to feedback. These are challenging times, but there are plenty of reasons for optimism in Birmingham • For the first time in ten years, children's services are showing sustained improvement. • We're addressing the city’s housing shortage, building more social and affordable homes. • We're working with partners on a range of initiatives to tackle homelessness. • We're addressing major health issues like air pollution. • And this city is currently attracting record levels of investment. Projects such as the exciting Smithfield Development and the £1 billion Curzon Investment Plan will create jobs and opportunities for this city's young and growing population. Not only that, but the Commonwealth Games in 2022 and the arrival of HS2 ensure a golden decade for the people of Birmingham. These projects, which will provide homes, jobs and opportunities for the people of Birmingham, are in stark contrast to the huge cuts being forced on our public services. Those cuts continue to hit the people of Birmingham hard and I want to pay tribute to council staff, who continue to provide a vital safety net for the most vulnerable people across this city, despite losing almost 12,000 colleagues since 2010. 2 The ongoing commitment and dedication from staff in such challenging times will be vital. And we can be proud of the fact that: • We’re building an entrepreneurial city to learn, work and invest in • Ensuring that Birmingham is an aspirational city to grow up in and a fulfilling city to age well in • This continues to be a great city to live in • Birmingham residents will gain the maximum benefit from hosting the Commonwealth Games Even in such challenging times, we continue to invest in the services that the people of Birmingham rely on. We will continue to attract investment, create jobs and build the homes needed by a growing city. And we will tackle inequalities, protecting the most vulnerable in our city. 3 CHAPTER 1: POLICY CONTEXT BIRMINGHAM: A CITY OF GROWTH WHERE EVERY CHILD, CITIZEN AND PLACE MATTERS Birmingham City Council has a clear vision for Birmingham, which is to create ‘a city of growth where every child, citizen and place matters’. This vision, along with the Council’s strategic outcomes and priorities, is described in its latest Council Plan 2018 – 2022 (published in June 2018) and are: • Birmingham is an entrepreneurial city to learn, work and invest in • Birmingham is an aspirational city to grow up in • Birmingham is a great city to live • Birmingham is a fulfilling city to age well in • Birmingham residents gain the maximum benefit from hosting the Commonwealth Games These outcomes are based on extensive conversations with citizens and partners, surveys and consultations – including the annual consultation on how the Council allocates its financial resources to meet its services priorities. These outcomes and priorities also seek to address the issues and challenges faced by the city and the priorities of its citizens, so provide an important reference point for the Council’s financial strategy. Challenge and opportunity Birmingham is at the heart of the UK’s transport infrastructure network and has strengths in business, professional and financial services and advanced manufacturing and strong recent jobs growth. The city is also home to approximately 7,500 tech firms, employing more than 40,000 people. And Birmingham is now rated as the UK’s most rapidly improving city. Birmingham is the most diverse major city in the UK outside London with almost half (46 per cent) of residents under the age of 30. But great opportunity goes hand-in-hand with great challenges. Birmingham is growing rapidly and its population of 1.15 million people will increase by a further 156,000 by 2031 equating to a need for 89,000 new homes. The Birmingham Development Plan provides for 51,100 new homes over the plan period, including affordable housing, with the shortfall to be accommodated outside of the city by other local authorities. Over two-fifths (42 per cent) of Birmingham children live in poverty, with many affected by welfare cuts. Birmingham is the sixth most deprived English local authority district, but poverty is also highly concentrated in parts of the city, leading to wide inequalities in life expectancy across the city. 4 Making a positive difference every day In addition to these challenges the ongoing impact of reductions in Government