Report of the Deputy Chief Executive and City Treasurer.

This report sets out the latest forecast revenue budget position, and the next steps. Following the Provisional Finance Settlement announced 18 December 2023 the Council is forecasting an estimated budget shortfall of £38m in 2024/25, £79m in 2025/26, and £90m 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 budget is balanced for 2024/25 and the remaining gap reduce to £29m in 2025/26 and £41m by 2026/27. This position assumes that savings of £21.4m are delivered next year.  

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 the final budget proposals on 14 February 2024.

In opening the item, the Chair informed the committee that items 9 and 9a 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?provided a further update on the priorities for the services in the remit of this committee and detailed changes to the initial revenue budget options proposed by officers in November 2023.  

Key points and themes within the reports included: 

·       Changes to the Council’s budget position following the Autumn Statement and Provisional Local Government Finance Settlement; 

·       After the application of approved and planned savings, and the use of c.£17m smoothing reserves in each of the three years, the budget is balanced for 2024/25 with a budget gap of £29m in 2025/26 and £41m by 2026/27. This position assumed that savings of £21.4m would be delivered next year; 

·       Actions totalling £15m, to ensure that the Council had a balanced budget for 2024/25; 

·       Highlighting that the Council had undertaken careful long-term financial planning which involved making some difficult decisions around cost reduction and doing things differently but that a significant and growing budget gap remained from 2025/26; 

·       Full analysis and results of the public consultation would be reported to the Budget Resources and Governance Scrutiny Committee meeting in late February; 

·       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; 

·       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; 

·       The proposal to reduce the book fund budget by £30k had been removed following the committee’s feedback in November 2023;  

·       An annual £2m contribution from the Capital Fund would be used to support the events commission and funded through the growth in retained business rates; 

·       Government grants and the income they provide; 

·       Workforce implications; 

·       Future opportunities; 

·       The indicative medium-term budgets by service area; 

·       The indicative medium-term budgets by type of spend/income; and  

·       A breakdown of the Community Safety budget, as previously requested by the Committee.  

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

·       Commending the work of officers in setting a balanced budget for 2024/25; 

·       Expressing concern over the uncertainty of the continuation of the Household Support Fund from government; 

·       Welcoming the withdrawal of a previous proposal to reduce the book fund budget by £30k; 

·       Expressing concern over funding for homelessness prevention and support and recognising how central government failed to provide appropriate funding for areas most in need, like Manchester; 

·       Recognising that households in Manchester were still feeling the impacts of the cost-of-living crisis; 

·       How the Council would reassure residents that there would not be cuts to vital services, particularly for those most vulnerable; 

·       Expressing thanks to officers within the Homelessness service for their work in reducing the use of bed and breakfasts as temporary accommodation; and  

·       Recognising that local councils provide a lifeline for residents.  

The Executive Member for Finance and Resources introduced the item and stated that the Government’s approach to the Local Government Finance Settlement had been chaotic and only announced just before Christmas. He said the final announcement when announced had resulted in a cut of 84% in the Services Grant and this equated to a £6.1m loss for Manchester. He stated that this had resulted in an outcry from local authorities and MPs from all political parties. He stated that this situation needed to be understood in the context of fourteen years of austerity and Government funding cuts and unfunded pressures such as inflation and population growth. ? 

The Executive Member for Finance and Resources added that the Government then swiftly announced an additional £500m for Social Care, however Local Authorities were still facing a £4bn budget gap nationally, resulting in a number of Local Authorities serving a Section 144 notice and it was anticipated that more would follow. 

The Executive Member for Finance and Resources commented that despite this Manchester had set a balanced budget and had been achieved through diligent planning and management that had witnessed the strategic investment in preventative initiatives; using financial reserves prudently and investment in activities that were important for Manchester residents.  

The Executive Member for Finance and Resources stated that although Manchester had been able to deliver a balanced budget this year, the Council’s financial position is expected to become even more challenging. The projected budget gap, even after using reserves for 25/26 was £29m in 2025/26 and rising to £41m by 2026/27. 

The Executive Member for Finance and Resources concluded by stating that the Government had continually failed to listen to Local Authorities. 

The Deputy Leader stated that significant work had been undertaken to reduce the use and costs of bed and breakfasts as temporary accommodation for those experiencing homelessness and that officers were looking at other ways to reduce costs within the service. She highlighted that budgetary pressures were a result of political choices at a national level, such as Section 21 eviction notices, and increased demand as a result of the asylum and refugee crisis, which the government had failed to provide adequate funding to address. She called on the government to provide adequate financial support to local authorities to tackle homelessness.  

The Executive Member for Skills, Employment and Leisure also confirmed that a previous proposal to withdraw the book fund budget by £30k had been withdrawn, following expressions of concern from committee members’ in November.  

In response to a query, the Executive Member for Finance and Resources explained that the revenue budget gap for social care and homelessness had increased since 2010. He recognised that it was impossible to protect and mitigate all services and that the government had changed the funding formula to benefit more affluent areas.  

Much of the committee’s discussion focused on the failure of government to provide adequate funding for authorities like Manchester. The Chair particularly expressed concern over budgetary challenges within the Homelessness service and stated that it was a fundamental right for people to have a place to live. She expressed disappointment that the current Conservative government prioritised funding for more affluent areas and called for an immediate general election.  

In closing the item, the Chair asked officers to convey the committee’s gratitude to all Council staff for their work in delivering a balanced budget.  

Decision: 

That the report be noted.