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 2023/24, based on expenditure and income activity as at the end of May 2023 and future projections.

The Executive Member for Resources and Finance reported that the current budget monitoring forecasted an overspend of £8.732m, with considerable risks to the position relating to the impact of rising demand and increasing costs.

The main pressures were being felt in the social care budgets reflecting the national pressures in the health and social care sector and trends being experienced across local authorities.  There was a £5.2m overspend in Adult Social care which was largely in the provision of long term care arrangements. Demand was above the 2023/24 budget assumptions, notably for older people residential and nursing care and homecare and on supported accommodation for people with learning disabilities and physical disabilities.  The forecast £2.7m overspend in Children’s Services was largely due to an increase in external residential placement costs. The directorate had a mitigation plan in place which had reduced the forecast overspend from £5.1m to £2.7m by the end of this financial year. Further in year mitigations were also being explored.  The main variations in the other service departments totalled £0.8m.

It was reported that £25.2m of savings were agreed as part of the budget process. Of these £15.1m (60%) were on track for delivery, £1.8m (7%) were risk rated medium, and £8.3m (33%) rated high risk in terms of the likelihood of delivery. Officers were working to identify alternative savings where original plans may not be achieved or delayed.

The following budget virements were presented for approval:-

·                Pension Saving – a saving of £2.950m from reduced pension costs;

·                Transfer of Workplace Adjustment Hub budgets from HROD to Audit, Risk and Resilience – £250k;

·                Transfer of £0.580m budget relating to Zero Carbon from Policy and Partnerships allocated to the posts that were delivering the Climate Change Action Plan (CCAP) priorities as follows:-

·                HROD - £218k

·                Housing and Residential Growth - £131k

·                Procurement and Commissioning - £124k

·                City Centre Regeneration - £107k.

·                The application of £3.5m to support residents through the cost-of-living crisis to the following services where Cost of Living Measures will be implemented:-

·                Revenue and Benefits £1.3m - to increase existing support to residents through Welfare Provision and Discretionary Housing payments.

·                Neighbourhood Teams £1.0m - Food response service.

·                Core - Policy and Partnerships £0.6m - support to voluntary and community groups.

·                Public Health £250k - Community Health Equity for Manchester support to community groups.

·                Homelessness £250k - additional advice offer to support residents.

·                Libraries, Galleries and Culture £45k - to support digital inclusion.

·                Core - Communications £40k - communications and engagement to residents.

·                Transfer of the Community Development Team ‘Buzz’ Budgets from Public Health to Neighbourhoods - £0.817m;

·                Transfer of Equality, Diversion and Inclusion to Public Health - £304k; and

·                Transfer of budgets between Capital Financing budgets and Service Budgets to simplify accounting arrangements.

Since the 2023/24 budget was approved there have been additional grant notifications which were now reflected in the revised budget as follows:-

·                S31 Grant Family Hubs and Start for Life programme 2023-24 - £2.2m

·                Additional Early Years funding (within DSG) of £204 million in 2023-24 and £288 million in 2024-25;

·                Homelessness Prevention Grant Top-up 2023/24 - £0.969m;

·                Council Tax Energy Rebate scheme administration - £317k;

·                New Burden’s funding – Elections - £159k;

·                UK shared prosperity fund – communities and place theme £0.648m in 2023/24 and £175k in 2024/25

Notification had also been received that the Local Authority Housing Fund would be expanded by £250 million for a second round of funding (LAHF R2), with the majority of the additional funding used to house those on Afghan resettlement schemes (ARAP/ACRS) currently in bridging accommodation and the rest used to ease wider homelessness pressures.  Indicative funding of £1.120m had been allocated to Manchester as part of the Local Authority Housing Fund (Round 2) to purchase an additional 10 properties, this would require capital match funding of £1.380m which would be funded through HRA capital receipts.

The Executive Member for Finance and Resources reported that when the budget was set in February 2023 a total of £14.3m was identified for price and electricity inflation.  £2.2m was allocated to Children’s for internal placements, £0.5m to Education Home to School Transport and £2.7m to Adults as a contribution to market sustainability.  This left £8.8m available for inflation pressures which were to be quantified in year. This was held corporately and allocated in year once the costs are known and the business cases made.

The report also set out inflationary budget requests from Children’s services totalling £2.442m for approval.  If this request was approved this wouldl leave £6.4m in the corporate price and utilities inflation budget.

Allowance for a 6% pay increase had been allowed for in the budget, costing an estimated £15.6m.  In February the National Employers offered a £1,925 pay increase from 1 April 2023 and 3.88% for those above the top of the pay spine.  The estimated budget requirement to fund this offer for Council staff was £15.5m for 2023/24, and therefore within the available budget. However, should any pay award above this level be agreed, this would exceed the current provision in the budget.

It was reported that a request for use of Collection Initiatives Reserve, totalling £311k in 2023/24 and £198k in 2024/25 had been reported in the Medium-Term Financial Strategy on 15 February 2023 and was being reported again as costs and plans had now been confirmed.  The reserve would be applied over two years for the implementation and supporting costs of GovTech software which would deliver efficiencies through streamlining and automating back-office processes on the council tax and housing benefits/council tax support system.

The Executive was reminded that any overspend this year would  be a direct call on the General Fund reserve which would need to be reimbursed in future years, therefore it was important mitigations were identified to bring forecast spend back in line with the available budget.

Councillor Leech raised concern around the £8.3m of savings previously identified as being classified as high risk and queried how realistic it would be for these to be achieved.  He also asked that based on the project overspend, what proportion of the general fund reserve would this take up.  He also expressed concern about the potential compound impact to future years budgets if the savings could not be achieved this year.

The Deputy Chief Executive and City Treasurer advised that the savings needed across social care were being subjected to higher than expected demand and cost pressures which could result in the ability to make a cost saving this year difficult.  The issues in Childrens Services were similar, and as a result were counteracting all the saving initiatives that were being out in place.  Looking at the MTFP for 2024/25, reassessing these pressures would be a key part of this eek.  In relation to of there was still a budget overspend at the end of the financial year, the Deputy Chief Executive nd City Treasurer advised that if this was to be met by the General Fund reserve, it would result in the balance of the reserve being below the recommended minimum for a Council the size of Manchester.

Decisions

The Executive:-

(1)      Note the global revenue monitoring report and forecast outturn position which is showing a £8.732m overspend.

(2)      Approve budget virements to be reflected in the budget as set out in paragraph 2.7 of the report.

(3)      Approve the use of additional revenue grant funding budget as set out in paragraph 2.8 of the report.

(4)      Approve the use of additional capital grant and match-funding by capital receipts as set out in paragraph 2.9 of the report.

(5)      Approve the use of budgets to be allocated, budget as set out in paragraph 2.10 to 2.13 of the report.

(6)      Approve the use of reserves budget as set out in paragraph 2.14 of the report.