Report of the Deputy Chief Executive and City Treasurer attached

The Executive considered a report of the Deputy Chief Executive and City Treasurer, which outlined the projected outturn position for 2022/23, based on expenditure and income activity as at the end of December 2022 and future projections.

The Leader advised that the current budget monitoring forecast was estimating an overspend of £3.5m for 2022/23.   The main drivers of the overspend are the pay award and the reductions in car parking and Christmas markets income and Home to School Transport. Overall, there was an improvement of £4.1m from Period 7, which was the last report to Executive in December 2022.

The position reflected the release of contingencies £0.3m, reduced price inflation requirement of £1.7m and a £0.6m reduction in the budget required for electricity. These amounted to a £2.6m reduction in the corporate overspends.  The Deputy Chief Executive and City Treasurer also commented that there had also been  an increase of £1.5m in Corporate Resources due to the redistribution of the Business Rates levy surplus from Central Government

It was reported that it was positive that the main demand led services within Adults, Children’s and Homelessness were underspending or breakeven, which puts the Council in a better position than many other councils and reflected the investment in prevention strategies over the last few years. 

Any remaining overspend which could not be mitigated in year would require the use of the smoothing reserve or the general fund reserve. The smoothing reserve had been established to assist with timing differences between savings plans being developed and delivered.  It was recognised that any unplanned use in the current year would reduce capacity to support future years savings programme and reduce the Council’s overall resilience.

Full details about of the budget forecasts and variances by Directorate were detailed in the report and budget changes could be summarised as follows:-

·                     Highways - Traffic Signal Optimisation - £0.5m grant awarded for upgrade and maintenance of traffic signals and associated equipment;

·                     Highways - Review of City Centre Controlled Parking Zone and on street tariffs (Parking Reserve) - £50k for the feasibility study estimate of £100k to review the current city centre controlled parking zones and on-street tariffs;

·                     Homelessness – Homelessness Prevention Grant Winter 2022/23 Top-Up. £0.530m to prevent vulnerable households from becoming homeless and manage local homelessness pressures;

·                     Corporate Core – Energy Bill Support Scheme: Alternative Funding Grant.  £2.300m to facilitate the scheme on an agent basis, whereby the Council acts as an intermediary of Government to make grant payments;

·                     Use of reserves over and above that agreed as part of the approved 2022/23 budget - £0.6m to Manchester Aquatics Leisure Centre to offset the income losses from the Leisure provider GLL for 2022/23;

·                     Utilities inflation - £3.246m to cover increased gas prices;

·                     Cost of living payments to internal Foster Carers of £300, expected to cost £150k in total;

·                     Payments to households who missed out on the Universal Credit cost Living autumn payments, estimated at £369k;

·                     £753k released from Contingency; and

·                     Price Inflation requests

The inflationary pressures outlined in the report were expected to continue into future years. This coupled with funding uncertainty increased the risks associated with setting a balanced and sustainable long-term financial plan and represent a deterioration of the Council’s financial position if no action was taken.  It was therefore vital that the Council continued with its programme of innovation and reform and developed its operating model to help tackle these challenges and keep the Council’s finances stable and sustainable.

The 2022/23 budget process saw the Council develop savings and efficiency plans of over £42.3m over the three years to 2025/26.  The provisional financial settlement announced on19 December 2022 reflected a change in government policy in relation to funding inflation and social care pressures. This had given the opportunity to review the quantum and phasing of savings and it was now proposed that options of £36.2m were progressed

Whilst the position for 2023/2 looked manageable, the financial position from 2023/24 to 2024/25 was much more challenging. The Medium-Term Financial Strategy elsewhere on the agenda set out the financial context for ensuring future financial sustainability.

Decisions

The Executive:-

(1)       Note the global revenue monitoring report and forecast outturn position which is showing a £3.5m overspend.

(2)       Approve the use of unbudgeted external grant funding.

(3)       Approve the release of reserve funding.

(4)       Approve the allocation of budgets to fund Utilities Inflation.

(5)       Approve the request for contingency funding.

(6)       Approve the allocation of budgets to fund Price Inflation.