Report of the Deputy Chief Executive and City Treasurer.

This report focuses on the announcements from the government’s Autumn Statement which have a direct implication for local government funding next year and in future years.

The committee considered a report of the Deputy Chief Executive and City Treasurer whichhighlighted the announcements from the Government’s Autumn Statement which have a direct implication for local government funding next year and future years.

Key points and themes within the report included:

• The Chancellor of the Exchequer, Jeremy Hunt MP, delivered the Government’s Autumn Statement (mini budget) to the House of Commons on 22 November 2023 and this was structured around reducing debt; cutting tax and rewarding hard work; and backing British business;
• The Autumn Statement and main Spring Budget announcements do not provide exact funding updates for Local Government, but provide important indicators as to the outlook for council funding and allow this information to be used to inform the medium-term financial plan and budget process;
• Further detail on the Local Government position was expected in early December when a policy document will be released by the Department for Levelling Up, Housing and Communities (DLUHC), and in late December when the provisional settlement with LA allocations would be published;
• The economic and fiscal forecasts published by the Office for Budget Responsibility alongside the Autumn Statement;
• There would be no increase in the overall funding envelope over the Spending Review period and no additional funding was announced for local authorities beyond the increases already expected;
• Announcements indirectly affecting residents included a rise in National Living Wage; the unfreezing of Local Housing Allowance (LHA); a rise in benefits; protection of the pensions ‘triple-lock’; a decrease in the rate of National Insurance; and changes to national insurance for self-employed people;
• The continuation of business rates retention arrangements for Greater Manchester under the Devolution Trailblazer;
• Medium-term implications; and
• The provisional settlement outcome and revised position will be reported to the committee and the Executive in January to consider the longer-term position.

Some of the key points and queries that arose from the committee’s discussion included:

• Whether it had been confirmed that the Household Support Fund (HSF) would not continue in 2024/25;
• If HSF funded free school meals and the Holiday Activity Fund scheme, and how these schemes would be funded if HSF ended;
• Noting that the Council received £12.9m in HSF, and querying whether any representations had been made to government to ask that this be continued; 
• Noting the rise in National Living Wage in April 2024, and querying whether this increase would be implemented regardless of any other staff pay deal;
• Noting the importance of communicating any changes in Local Housing Allowance and the relevant Universal Credit aspect of housing support;
• The possibility of there being a period where employees would need to receive a pay uplift to meet the Real Living Wage whilst an agreed pay award was being implemented; and
• Most residents in Manchester would not feel the benefit of tax cuts set out in the Autumn Statement due to the freezing of the income tax threshold and the cost-of-living crisis.

The Executive Member for Finance and Resources stated that the Chancellor’s Autumn Statement made no reference to local government and failed to recognise the cumulative effect that budget cuts have had on council finances. He stated that the Council was not anticipating an uplift in funding in the next spending review period, but the government had indicated that a robust and resilient Local Government Finance Settlement would be provided in December. He informed the committee that there had been no decision on the continuation of the Household Support Fund (HSF) and that there would be no additional funding for the Homeless Prevention Grant. He also expressed his belief that a change of government was needed.

In response to queries regarding HSF, the Deputy Chief Executive and City Treasurer stated that figures in a previously published document showed that funding would end. However, a parliamentary question was asked after the Autumn Statement about future provision of HSF, and it was stated that this would continue into the next year but it was still being reviewed by government. It was further explained that c. £6.7m of HSF was used to fund free school meals during school holidays and that most of the Holiday Activity Fund was funded separately with a top-up contribution from the Council to enable this to run during half-term holidays as well as the summer holidays. The remainder of HSF funds were used for support payments to residents who were eligible and to carers.

It was clarified that HSF would run to the end of the current financial year and, whilst the loss of this funding could not be mitigated, officers were looking at how best to use all funding.

The Deputy Chief Executive advised that the committee would receive a report in January 2024 on welfare support funding provided by the Council and how this could be best used. A member requested that this report include information on any changes to Local Housing Allowance rates, whether this would affect the eligibility criteria for Council Tax Support and if it would increase the workload of the Council’s Revenue and Benefits Unit.

In response to queries regarding the National Living Wage, the Deputy Chief Executive and City Treasurer explained that employers were obliged to pay the National Minimum Wage and the Council was committed to paying the Real Living Wage, which would be factored into discussions with providers around funding. She stated that these discussions were separate to any pay-negotiating bodies which looked at broader pay settlements across the public sector.

Members were informed that the process of managing local authority pay and the impacts of this were complex and it was difficult to undertake a differential pay award increase. The Executive Member for Finance and Resources echoed members’ points but emphasised the need to be thorough in pay negotiations and to come to a mutually agreeable resolution. 

The Executive Member for Finance and Resources echoed a comment made that Most residents in Manchester would not feel the benefit of tax cuts set out in the Autumn Statement.

Decision:

That the report be noted.