Report of the Deputy Chief Executive and City Treasurer.

This report provides a high-level overview of the updated budget position for 2024/25.

In opening the item, the Chair advised the committee that items 8 and 8a would be considered together and the committee considered a report of the Deputy Chief Executive and City Treasurer which provided an overview of the Council’s updated budget position for 2024/25 and a report of the Strategic Director (Neighbourhoods) which outlined the priorities for the services in the remit of this committee and detailed the initial revenue budget changes proposed by officers.

Key points and themes within the reports included:

• An estimated budget shortfall of £46m was expected in 2024/25, £86m in 2025/26, and £105m by 2026/27;
• This gap would reduce to £1.6m in 2024/25, £30m in 2025/26 and £49m by 2026/27 after the application of approved and planned savings and the use of c£17m smoothing reserves in each of the three years;
• The indicative medium-term financial position;
• A review of emerging pressures and budget assumption had been completed and provision made to address these where unavoidable, including inflation and pay awards;
• The planned public consultation on proposed council tax levels and savings and cuts measures;
• Next steps in the budget process;
• Providing an overview and information on the priorities of the Neighbourhoods directorate;
• The services under the remit of this committee;
• The base budgets for each service area for 2023/24;
• Current financial pressures and ongoing high inflation rates meant it was necessary to revisit the initial assumptions and identify further savings options for consideration whilst protecting service delivery;
• Noting that a temporary reduction in the annual £40k contribution to the security measures for the Christmas Markets whilst Albert Square is unavailable would be re-introduced once the markets return to Albert Square;
• A proposal to reduce libraries’ book fund budget by £30k to £0.65m per annum;
• Government grants and the income they provide;
• Workforce implications, including reviews of vacant posts;
• Future opportunities;
• The indicative medium-term budgets by service area; and
• The indicative medium-term budgets by type of spend/income.

Key points and themes that arose from the committee’s discussion included:

• Acknowledging the 13-year period of austerity and the Local Government Association’s warning that local authorities were facing a £4bn funding shortfall;
• Noting ongoing inflationary pressures and the advantage that a Fair Funding Settlement would provide;
• Expressing concern with the proposed £30k cut to the book fund budget;
• The impact of inflation on the Council’s income stream;
• Highlighting the additional burden placed on the Homelessness service as a result of the government’s plan to provide 7 days’ eviction notice to asylum seekers in temporary accommodation;
• The impact of the cost-of-living crisis increasing demand for Council services and support whilst the Council’s budget was being cut at the same time;
• The financial implications of cuts to homelessness grants, such as the Afghan Resettlement Funding; and
• Requesting further breakdown of the budget allocated to tackle crime and disorder.

The Strategic Director (Neighbourhoods) provided an overview of the key points within the reports and explained that the Neighbourhoods directorate had a net budget of £66m with 1364 full-time equivalent (FTE) posts. The Head of Finance reiterated the process for approving the budget and advised the committee that a report on the government’s Autumn Statement would be considered at Resources and Governance Scrutiny Committee in December 2023 and final proposals following public consultation would be provided to each Scrutiny Committee in February 2024 for final approval by Full Council in early March.

The Statutory Deputy Leader emphasised that the report included officer proposals for the 2024/25 budget and that Executive Members would lead on these proposals once considered by the relevant Scrutiny Committees.

The Deputy Leader reiterated the comments of the Statutory Deputy Leader and stated that local authorities across the country had lost 27% of their spending power as a direct result of cuts to local government funding imposed by central government. She explained that Manchester had been disproportionately affected due to levels of need and deprivation and what she stated as the unfairness of cuts and the ideological choices of government. The committee was informed that, had the Council received the average cut in funding, there would be an additional £70m to spend on residents and services. She highlighted that some local authorities in England were facing bankruptcy and stated that Manchester was not in such a position due to the careful financial management of officers, who she commended, but acknowledged the precarious financial situation that the Council found itself in as result of inflationary pressures and the cost-of-living crisis.

In response to concerns raised regarding the proposal to reduce the book fund budget, the Strategic Director (Neighbourhoods) recognised the impact of this and that the book fund had been reduced in previous budgets. He explained that making budget cuts was not an easy decision and that reducing the book fund budget seemed to be the least impactful in comparison to closing libraries or reducing staff numbers. The Director of Neighbourhood Delivery explained that the book fund budget was used to purchase both physical copies, e-books and online subscriptions. He advised that if the proposed cut was approved, officers would look to cut less-used subscriptions in the first instance.

The Head of Finance stated that there had been implications on a range of services as a result of rising inflation rates, which were not anticipated. Examples of this included commissioning costs in social care and in housing. He explained that the report included forecasts on inflation rates and this would be reviewed throughout the year. 

In closing the item, the Chair acknowledged that the Council had lost 27% of its budget since 2010 and stated her belief that the government systematically ensured that cities like Manchester were disproportionately targeted for their political allegiance. She also placed on record her thanks to Council officers for their work in making and implementing difficult financial decisions. 

Decision:

That the committee

1. notes the report;
2. expresses concern with the proposed £30k cut to the book fund budget and requests detail on how the impact of this cut might be mitigated for service users and what the year-on-year cuts to this budget have been;
3. requests that the Neighbourhoods directorate 2024/25 budget report in February 2024 includes information on any plans to mitigate the financial implications of cuts to homelessness grants, such as the Afghan Resettlement Funding; and
4. requests that the Neighbourhoods directorate 2024/25 budget report in February 2024 provides further breakdown of the budget allocated to tackle crime and disorder.