To approve as a correct record the minutes of the meeting held on 10 January 2023.

Decision:

That the minutes of the meeting held on Tuesday, 10 January 2023 be approved as a correct record.

Report of the Deputy Chief Executive and City Treasurer.

This report sets out the latest forecast revenue budget position, and the next steps. Following the provisional finance settlement, announced on 19 December, the Council is forecasting a balanced budget for 2023/24 and 2024/25. The financial risk around balancing the budget has moved to the next Spending review period 2025/26 where a shortfall of £58m is forecast. This reduces to £41m after the proposed use of £17m smoothing reserves.

The committee considered a report of the Deputy Chief Executive and City Treasurer, which outlined the latest forecast revenue budget position and the next steps. Following the Provisional Local Government Finance Settlement announced on 19 December, the Council was forecasting a balanced budget for 2023/24 and 2024/25. The financial risk around balancing the budget had moved to the next Spending Review period in 2025/26 where a shortfall of £58m was forecasted. This would reduce to £41m after the proposed use of £17m smoothing reserves.

Key points and themes within the report included:

• The Council identified cuts and efficiencies totalling £42.3m over three years for consideration by Scrutiny Committees in November 2022. It was now proposed to progress options of £36.2m, a reduction of £6.1m overall;
• Changes arising from the Settlement, including to Business Rates Retention; the Services Grant; and Social Care and Funding;
• The additional investment proposals included within the Budget;
• £16m of reserves per annum for three years were proposed to close the pre-Settlement budget gap and this would be rephased following receipt of the Settlement to support a sustainable position, particularly to support closing the budget gap in 2024/25 and to deal expected funding shortfalls in 2025 and beyond;
• The indicative workforce reduction linked to the savings proposals has reduced from 70 Full-Time Equivalent (FTE) over the three years to 60, which was anticipated to be managed via natural turnover and vacancies;
• A second phase of public budget consultation was undertaken between 7 January and 7 February with a full analysis and results reported to Budget Scrutiny Committee on 27 February; and
• The final budget position for 2023/24 and future years will be confirmed at February 2023 Executive. This will be after the Final Finance Settlement is received, expected early February.

Key points and queries that arose from the committee’s discussions included:

• Acknowledging that the government’s announcements had deferred difficult financial decisions to 2025/26 and did not provide certainty or financial security for councils over the longer term;
• Commending officers for their work on the budget; and
• Noting the Council’s dependency on government funding and business rates income rather than council tax, and that residents would focus on the proposed council tax increase.

The Executive Member for Finance and Resources wished to place on record his thanks to the Deputy Chief Executive and City Treasurer and her team for all their hard work following the Settlement announcement. He stated that the Budget Settlement needed to be considered in the context of over a decade of austerity imposed on Manchester. He stated that if the city had received the average cut in funding Manchester would be £77m per year better off. He commented that the decision to cut local authority funding was a result of ideological decisions taken by the Government, noting that the Government failed to recognise or apologise for the instability they had caused to the national economy. He further referenced the impact of inflation, population growth in the city and the cost-of-living crisis on budgetary pressures.  ...  view the full minutes text for item 8.

Report of the Deputy Chief Executive and City Treasurer; City Solicitor; and Assistant Chief Executive.

This report provides a further update to members on the priorities for the services in the remit of this committee and details the changes to the initial revenue budget options proposed by officers in November 2022. The provisional financial settlement announced 19 December reflected a change in government policy in relation to funding inflation and social care pressures. This has given the opportunity to review the quantum and phasing of savings. It is now proposed that options of £36.2m are progressed, of which £7.712m is within the remit of this scrutiny committee.

The Committee considered a report of the Deputy Chief Executive and City Treasurer, the City Solicitor, and the Assistant Chief Executive, which provided a further update to members on the priorities for the services in the remit of this committee and detailed the changes to the initial revenue budget options proposed by officers in November 2022.

Key points and themes within the report included:

• It was now proposed that savings options of £36.2m are progressed, of which £7.712m is within the remit of this scrutiny committee;
• The Corporate Core is made up of Chief Executives and Corporate Services and has a gross budget of circa £317 million and a net budget of circa £98.9 million and employs over 2,000 Full-Time Equivalent (FTE) employees;
• Traded services within Operations and Commissioning are also within the remit of the Resources and Governance Scrutiny Committee, and have a gross budget of £22.9 million, a net income budget of £13.7 million and 126 employees;
• Initial proposed cuts and savings options suggested in November 2022 amounted to £10.26m over the three years. As a result of the improvement in the short-term budget position following the Autumn Statement and Provisional Finance Settlement, proposed cuts and savings of £2.920m have been removed or deferred until later years;
• Revised core budget savings will be delivered through a combination of:
  • Transformation delivered through the Future Shape Programme.
  • Review of workforce structures and capacity and adopting a realistic view on abilities to fill longstanding vacancies.
  • Good housekeeping and delivery of efficiencies.
  • Delivering a corporate programme of work on ensuring the basics are right, sound and competitive procurement, approach to managing inflation, ensuring income budgets are maximised and charges appropriate.
• Further budget savings and efficiencies made up of £170k additional income generation and £3.29 million efficiencies;
• Budget pressures and workforce implications; and
• Future opportunities and risks.

Key points and queries that arose from the committee’s discussions included:

• Whether any consideration had been given to raising the proportion of council tax covered by the Council under the Council Tax Support Scheme (CTSS), and
• The likeliness that all vacant units within the Gorton Hub would be let.  

The Leader of the Council introduced the item and explained that in proposing the budget for the Corporate Core directorate, officers had tried to protect frontline services to ensure continued support for the most vulnerable residents, particularly given the current cost-of-living crisis. She highlighted decisions to invest money into helping communities through discretionary payments, funding for food provisions and expanding debt support and emphasised that support was available for those in need.

The Deputy Chief Executive and City Treasurer explained that the Council was considering changing the level of council tax paid by residents on CTSS from the current maximum of 17.5% to 15%. Any change would require a full consultation, and this was anticipated to be undertaken within the next year. Any changes would then be implemented through the 2024/25 budget process.

In response to the Chair’s query regarding vacant units in the Gorton Hub, it  ...  view the full minutes text for item 9.

Report of the Deputy Chief Executive and City Treasurer, the Strategic Director (Growth and Development) and the Strategic Director (Neighbourhoods).

This report presents members with details on the proposed Housing Revenue Account (HRA) budget for 2023/24, an indication of the 2024/25 and 2025/26 budgets, alongside the outlook for the 30-year HRA business plan in light of the budget proposals.

The committee considered a report of the Deputy Chief Executive and City Treasurer, the Strategic Director (Growth and Development) and the Strategic Director (Neighbourhoods) which outlined the proposed Housing Revenue Account (HRA) budget for 2023/24, an indication of the 2024/25 and 2025/26 budgets, and the outlook for the 30-year HRA business plan in light of the budget proposals.

It also sought Executive approval to increase rents in line with current Government guidance of restricting rent increases to a maximum of 7% for all properties, except PFI properties, where standard increase of CPI +1% (11.1%) was proposed, also in line with Government policy.

Key points and themes within the report included:

• Social rents were subject to annual increases aligned to a national rent policy, which was usually up to the consumer price index (CPI) plus 1%. The cost-of-living crisis resulted in the Government launching a consultation exercise and it had been advised that the maximum social rent increase would be capped at 7%, with an exception for properties within PFI contracts;
• As a result of increased numbers of Right to Buy; the in-house management of the Northwards Housing stock; overspends on repairs and maintenance; heating charges; and PFI contractor costs, it was forecasted that expenditure would be £14.940m higher than income and this would need to be funded by additional use of reserves;
• The HRA budget complied with the statutory requirement to be in balance over the three-year budget strategy period, although there was a small deficit over the course of the 30-year business plan;
• The average weekly rent, including increases, which would come into effect from April 2023;
• Housing benefit levels had not been capped and the proposed rent increases would be covered in full for those residents in receipt of 100% housing benefit entitlement, and tenants in receipt of universal credit would also be partially protected from the impact of any increase in rents; and
• The impact over the life of the business plan of the proposed 7% rent increase for all properties, except PFI properties. At the end of 30 years the deficit with a 7% increase for all properties and 11.1% increase for PFI properties is c£19m, but if rents for every property were increased by 11.1% the position after 30 years shows a £123m improvement to a c.£104m surplus.

Key points and queries that arose from the committee’s discussions included:

• Noting the major impact of raising rents by 7%, as opposed to following usual practice and increasing by 11.1%, and the difference in revenue over 30 years because of this; 
• Whether loss of rent income as a result of bringing voids – properties which have been unoccupied for a period of time – back into use and retrofitting properties was accounted for in the 30-yearbusiness plan;
• Whether there was a procedure in place to refer tenants applying for the HRA hardship fund to the Corporate Core hardship fund to maximise resources; and
• Why the anticipated savings from the decision to bring Northwards-managed housing back into  ...  view the full minutes text for item 10.

Report of the Deputy Chief Executive and City Treasurer.

This report considers the impact of adopting the further discretionary powers that the Government is planning to introduce, which would enable councils to charge the 100% long term empty premium on empty and unfurnished homes after one year instead of two from 1 April 2024 and to charge a higher rate of Council Tax for empty, furnished properties (including second homes) from 1 April 2024.

The committee considered a report of the Deputy Chief Executive and City Treasurer which considered the impact of the Government’s plan to introduce further discretionary powers for Councils to charge the 100% long term empty premium on empty and unfurnished homes after one year instead of two from 1 April 2024 and to charge a higher rate of Council Tax for empty, furnished properties (including second homes) from 1 April 2024.

Key points and themes within the report included:

• The proposal to introduce a 100% premium on empty, furnished properties (including second homes) from the date they become empty could provide an increase of up to £4,611,438 in Council Tax and charging the Long-Term Empty premium after one year instead of two could provide an additional increase up to £1,227,198;
• Since 2019, a 100% premium had been charged on properties left empty and unfurnished for over two years; a 200% premium on those empty for between five and ten years; and a 300% premium on those empty for more than ten years;
• There were 733 properties in Manchester that had been empty and unfurnished for 1-2 years, 2,846 properties that were classed as empty and furnished for twelve months with no change to the liable person and a further 2,525 properties that had been empty for less than 12 months;
• Charging the Long-Term Empty premium would encourage owners to bring properties back into use and the Council would also benefit from the New Homes Bonus as a result of this;
• Empty, unfurnished properties owned by Registered Social Landlords (RSLs) would not be affected by the addition of this premium as they qualify for a separate 100% discount due to their charitable status;
• These proposals would be open to public consultation as part of the wider budget consultation exercise; and
• The Council was proposing to adopt the power to increase the charge on empty, furnished properties, but defer a final decision to use it until the consultation exercise was complete and there was a better understanding of the effect of the changes and how the new powers may impact on the Council’s wider housing strategy.

Key points and queries that arose from the committee’s discussions included:

• Welcoming the proposed changes;
• Concerns that social tenants would have increased liability for council tax which would not be eligible for Council Tax Support where tenancies overlap;
• Whether council tax would continue to be charged where a resident has had to vacate their property due to ongoing cladding and fire safety remediation works;
• Issues around ‘phantom tenancies’, where a landlord claims that a tenancy was in place to refute council tax liability but there is no record of such;
• Whether the Council was still able to issue Empty Dwelling Management Orders, to assume control of long-term unoccupied properties and bring them back into use;
• Noting the significant number of properties in Manchester where the Council Taxpayer is deceased, and what influence the Council to encourage beneficiaries to bring these properties back into use;  ...  view the full minutes text for item 11.

Report of the Governance and Scrutiny Support Unit.

This report provides the Committee with details of key decisions that fall within the Committee’s remit and an update on actions resulting from the Committee’s recommendations. The report also includes the Committee’s work programme, which the Committee is asked to amend as appropriate and agree.

The Committee considered the report by the Governance and Scrutiny Support Unit which provided details of key decisions that fell within the Committee’s remit and the Committee’s work programme, which was to be amended as appropriate and agreed.

The Chair reminded members that the next meeting would be held on Monday, 27 February at 10am. He also highlighted that there were two substantive items included on the work programme for the meeting in May, in addition to the annual work programming session.

Decision:

That the report be noted and the work programme agreed.