Report of the Deputy Chief Executive and City Treasurer

The Council is forecasting an estimated budget shortfall of £46m in 2024/25, £86m in 2025/26, and £105m 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, this gap reduces to £1.6m in 2024/25, £30m in 2025/26 and £49m by 2026/27. This position assumes that the savings approved as part

of the Medium-Term Financial Strategy in February 2023 of £36.2m over three years are delivered.

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

The Committee considered the report of Deputy Chief Executive and City Treasurer which informed Members that the Council was forecasting an estimated budget shortfall of £46m in 2024/25, £86m in 2025/26, and £105m 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, this gap reduced to £1.6m in 2024/25, £30m in 2025/26 and £49m by 2026/27. This position assumed that the savings approved as part of the Medium-Term Financial Strategy in February 2023 of £36.2m over three years were delivered. 

The report provided a high-level overview of the updated budget position.  The Committee was invited to consider the current proposed changes which were within its remit and to make recommendations to the Executive before it agreed to the final budget proposals in February 2024.

Key points and themes within the report included:

·         Updates on the refreshed position including progress in reaching a balanced budget, reflecting preliminary savings and investment options;

·         The government was expected to announce the Autumn Statement on 22 November 2023, but no major changes were expected;

·         Government funding for 2024/25 would be confirmed in the provisional finance settlement, expected late in December 2023;

·         The accompanying report set out the priorities and officer proposals for the services within the remit of this committee. This included a reminder of the savings proposals identified as part of last year’s budget setting process (£36.2m across three years) and additional savings for consideration (£2.5m from 2024/25). As far as possible these were aimed at protecting the delivery of council priorities and represented the least detrimental options; and

·         There remained a forecast shortfall of £1.6m next year. Any further reduction to the underspend this year would reduce the need to top back up General Fund reserve in 2024/25 and help bridge this shortfall. In addition, the Collection Fund position would be finalised in January and the final levy amounts from GMCA confirmed.

The Leader informed the Committee that she had written to the Chancellor of the Exchequer to highlight the precarious financial position that Manchester and other local authorities were in, with sustained funding cuts over a number of years, increasing budget pressures and rising demand for services.

Members expressed concern about the financial position that Manchester had been placed in over a number of years.  Members commended officers and the Executive for delivering a balanced budget over these years in the face of so many challenges, commenting that Manchester had been disproportionately affected by funding cuts.

In response to a Member’s question about confidence in financial forecasting, the Head of Finance (Corporate Core) reported that there were elements of risk, for example, relating to inflation and increased demand, and the budget would be refreshed every year. He advised Members that the Committee would receive a further budget report in February, following the financial settlement from Government in December.  In response to a further question, he drew Members’ attention to a more detailed report on the budget, including the risks and assumptions made, which had been submitted to the Resources and Governance Scrutiny Committee.

Decision:

To note the report.