Report of the Deputy Chief Executive and City Treasurer.

This report sets out the financial challenge facing the Council, the latest forecast position, and the next steps. The Council is forecasting an estimated budget shortfall of £44m in 2023/24, £85m in 2024/25, and £112m by 2025/26. After the use of c£16m smoothing reserves in each of the three years, this gap reduces to £28m in 2023/24, £69m in 2024/25 and £96m by 2025/26.

This report sets out the high-level position. Officers have identified potential savings options to reduce the budget gap totalling £42.3m over three years.

Even after these proposals there remains a budget gap of £7m to close to get to a balanced budget in 2023/24 and further savings options will be developed between now and January 2023 and be reported back to Scrutiny committees in February. Each scrutiny committee is invited to consider the current proposed changes which are within its remit and to make recommendations to the Executive before it agrees to the final budget proposals in February 2023.

In introducing the item, the Chair proposed that item 8 – Growth and Development 2023/24 Budget Proposals – be discussed in conjunction with this item.

The Committee considered a report of the Deputy Chief Executive and City Treasurer which outlined the financial challenge facing the Council, the latest forecast position, and the next steps.

Key points and themes within the report included:

·         The Council is forecasting an estimated budget shortfall of £44 million in 2023/24, £85 million in 2024/25, and £112 million by 2025/26;

·         After the use of circa £16 million smoothing reserves in each of the three years, the estimated budget shortfall reduces to £28 million in 2023/24, £69 million in 2024/25 and £96 million by 2025/26;

·         There remained a budget gap of £7 million to close to get to a balanced budget in 2023/24 despite proposals outlined in the report;

·         The Council’s funding from central government would be confirmed in the Provisional Finance Settlement, which was expected in late December 2022;

·         The indicative medium-term position, planned use of reserves and the level of savings proposals to date;

·         An assumed council tax increase of 1.99% per annum and Adult Social Care precept of 1% per annum;

·         Indicative workforce reduction linked to savings proposals was anticipated to be managed through natural turnover and vacancies;

·         Public consultation on the proposed council tax levels and savings and cuts measures would take place from early November 2022 until January 2023 and a full analysis would be reported to Budget Scrutiny in late February; and

·         The next steps for the budget process.

The key points and queries that arose from the Committee’s discussions included:

·         Expressing disappointment at the budget cuts imposed by central government;

·         Commending officers for maintaining a strong financial standing for the Council and continuing to support residents; and

·         If and how a reduction of 70 FTE as outlined in the report would impact the workload of teams and services;

The Executive Member for Finance and Resources introduced the item by highlighting Manchester City Council as a well-managed and financially-responsible authority and stated that the budget shortfall was the direct result of ideological decisions taken by the government over the previous decade. He explained that the Council’s budget had been unfairly cut by £428 million since 2010/11 and that if Manchester had received the average cuts to funding the city council budget would be £77 million per year better off.

Members were informed that the problem was not solely experienced by Labour Councils and a recent survey conducted by Grant Thornton found that 1 in 6 councils would run out of money in 2023/24.

The Executive Member for Finance and Resources provided assurances that the loss of 70 FTE would be through natural turnover and there would be no need for voluntary retirement or severance, meaning there would be little impact on the workload of officers and teams. The dedication and commitment of staff to the city enabled the Council to continue providing services for residents.

The Directorate Head of Finance highlighted that this was the first-stage of the process but more savings were needed to ensure a balanced budget. A report would be provided to Scrutiny Committees in January 2023 and a firmer position was anticipated then as the Autumn Statement and Finance Settlement would be released.

Decision:

That the report be noted.