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 19 December the Council is forecasting a balanced budget for 2023/24 and 2024/25. The risk has moved to the next Spending Review period 2025/26 where a shortfall of £57m is forecast. This reduces to £40m after the proposed use of £17m smoothing reserves.

The Committee considered a report of the Deputy Chief Executive and City Treasurer which outlined the Council’s latest forecast revenue budget position, and the next steps. Following the Provisional Local Government Finance Settlement announced on 19 December 2022, the Council was forecasting a balanced budget for 2023/24 and 2024/25. The risk moved to the next Spending Review period in 2025/26 where a shortfall of £57m was forecast and this would reduce to £40m after the proposed use of £17m smoothing reserves.

Key points and themes within the report included:

• The Finance Settlement meant that the budget gap identified in November could be closed, without the need for further cuts and savings, and provided some opportunity for reducing the quantum and rephasing some of the savings;
• It was now proposed that options of £36.2m be progressed, a reduction of £6.1m, although additional funding streams announced as part of the Settlement came with several spend requirements, and additional pressures had emerged since the November Scrutiny report;
• £16m of reserves per annum were being used to close the pre-Settlement budget gap and would be rephased to support a sustainable position, particularly to support closing the budget gap in 2024/25 and to deal with the significant risks faced in 2025 and beyond;
• A proposal to increase the Council Tax precept by 2.99% and the Adult Social Care precept by 2% was reflected in the base and would be alongside targeted support to residents who are most vulnerable;
• The Settlement also gave some scope for targeted investments which would put the council in a more sustainable position to face the next spending review in 2025;
• Indicative workforce reduction of 60 Full-Time Equivalent (FTE) posts linked to savings proposals was anticipated to be managed through natural turnover and vacancies;
• A second phase of the budget consultation was underway and provisional results from this would be provided to the Executive on 15 February, with a full analysis to Budget Scrutiny on 27 February; and
• The next steps for the budget process.

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 announcements. He stated that the budget settlement needed to be considered in the context of over a decade of austerity imposed on Manchester. He further referenced the impact of inflation, population growth in the city and the cost-of-living crisis all had on budgetary pressures. He commented that the Government had failed to communicate their financial decisions for city, noting the recent experience of announcements of the Levelling Up bids.

He commented that the Provisional Local Government Finance Settlement announced on 19 December 2022 provided greater financial certainty than anticipated and enabled some proposed cuts to be removed or deferred.

Members expressed their disappointment at the inaction of and lack of communication by the government referred to by the Executive Member and commended the Executive and officers for their work in identifying the budget proposals.