What we're being told here is that public services equals bad," says Roger McKenzie, West Midlands secretary for the Unison union. "Private delivery of what we now understand as public service is the best. That's the parameter of the debate. That's just plain wrong. That's not a genuine debate about public services."
OUTSOURCING RISK?
Of course, companies that provide outsourcing and support services could gain, which would mean more jobs in the private sector. But some councils remain wary of following that path. Manchester council plans to crop spending, but council leader and Labour Party member Sir Richard Leese argues that outsourcing contracts offers too little flexibility.
"Outsourcing seems like an easy solution. A lot of experience suggests that it's pretty inefficient," Leese says, arguing local authorities and others have been stung by contracts which were rapidly outdated in areas such as information technology. "We haven't gone for outsourcing to a great extent, in general. We can make more savings, more efficiently, with more flexibility, without doing that."
Local governments lack the political and financial clout to renegotiate contracts with large outsourcing companies, unlike central government which has already put pressure on the private sector to help shoulder the burden of cuts.
And there may be business as well as political reasons against going private. For one thing, councils can never completely outsource the risks entailed in providing public services. "Just because you've outsourced the service, doesn't mean that you've outsourced the risk and the problem," says Andrew Jepp, head of local government at Zurich Municipal, which provides risk and insurance solutions to Britain's public services.
EASTERN PROMISES
Birmingham has hinted it may try to cushion the blow by winning investment from foreign investors. Since January 2009, council leaders have been in talks with Middle East investors such as Kuwait and the United Arab Emirates. Those talks have led to approaches from sovereign wealth funds.
Whitby says the sale of stakes in key assets, such as the UK's largest exhibition centre, the NEC, could not be ruled out. "We would allow them to be in partnership with our assets including the National Indoor Arena (NIA), the Symphony Hall, the ICC (International Convention Centre) and the National Exhibition Centre (NEC)," he told Reuters, before later denying talk of selling off "the family silver".
It helps that wealthy Gulf investors seem keen to play a role in debt-laden European countries. Last month, Qatar promised to pump $5 billion into Greece's energy and banking sectors among others.
It also helps that some Birmingham businesses are more than happy to embrace their Gulf suitors. On Birmingham's Temple Row, imposing Georgian buildings stand alongside glass office blocks. The square is a financial and legal hub where entrepreneurs rub shoulders with some of the city's oldest firms. Inside one modern office block, lawyer Noor Siddiqi provides general solicitor services -- from debt collection to divorce. He also boasts a client base that includes many foreign businessmen with assets both in Britain and in the Gulf.
Siddiqi says he wants to exploit his far-reaching contacts to fill what he sees as a vacuum created by a lack of investment in the city and the demise of government funding for small to medium-sized businesses. "My objective is to bring to the attention of the Middle East, Midlands-based companies," says Siddiqi, dressed in a tailored suit and waistcoat.
Last month he hosted a visit by an Emirati official, a contact he made through regular visits to the United Arab Emirates and Saudi Arabia, where he says he has contacts in the royal family. "We've got to engineer a situation where some of these people can start up projects."
Siddiqi says there is no shortage of interested investors in the Middle East looking for opportunities overseas. He also says he is tapping private equity contacts who could be interested in buying Birmingham-based businesses.
TAPPING THE MARKETS
Katie Teasdale, head of policy at the Birmingham Chamber of Commerce Group, believes Birmingham should shift its emphasis to skills training -- as long as unemployed workers are trained in fields that are growing. Companies like India's Tata Motors, which owns the Jaguar factory in Longbridge, present Birmingham and the region with an opportunity, she argues.
"Tata are now investing in low-carbon vehicles, if we play our cards right I genuinely think we could be the leader in low-carbon vehicles," she says. "We need to future-proof our economies."
Potentially, Birmingham might also issue bonds. This is something the city successfully did in 2005 with an infrastructure refinancing, and it's an idea that Deputy Prime Minister Nick Clegg has suggested could be revived. Municipal bonds are a very active market in the United States and Europe, but under Margaret Thatcher's centralising drive, councils in Britain stopped tapping markets in the 1980s and today wouldn't dream of borrowing on their own account.
Now, in a climate where investors are hungry for yield -- and worried about the falling credit ratings of countries such as Greece and Ireland -- some proponents say municipal issues could arouse investor interest. Stuart McKinnon, a partner at consultancy Lane Clark and Peacock in London, says he has not seen any signs of demand yet.
"This is a market which has not existed for many, many years," says McKinnon. "What investors are screaming for -- for want of a better word -- is yields. With gilts yielding less than 4 percent even on a 50-year-gilt, they are looking for ways to generate returns, and if this market reopened then they may invest, but I would not recommend clients going into it blindly. I would not see municipal bonds as the panacea for their problems."
'BEST-RUN CITY IN THE WORLD'
Back in the council meeting, representatives gather in a small room to scrutinise funding for leisure facilities. Could savings come from training school-age cricket teams to maintain the fields? Can a swimming pool revamp be scaled back? The chairman urges them to help themselves to tea and coffee and goes on to joke that the council's budget will soon no longer afford them such niceties.
Talk afterwards turns to bygone glories and Joseph Chamberlain, a prominent 19th-century businessman and Liberal Party politician who was mayor of the city in the late 1800s. Chamberlain, who brought Birmingham's water and gas works under the ownership of the council, is widely credited with alleviating much of the city's poverty at a time when commerce was booming.
"When Joseph Chamberlain led Birmingham city council, he made it the best-run city in the world," says one councillor, declining to be named. "My forefathers here had the courage to invest in schemes for the benefit of Birmingham, but in the current circumstances, we can't afford to borrow anymore - I am really concerned about the finances."
What is the most effective way Birmingham can save money now? "I jokingly say what I'd like to do is sink a coal shaft into Sutton Coldfield," he says, "and start running that again."
(With additional reporting by Cecilia Valente in London; editing by Sara Ledwith and Simon Robinson)