Agenda item

Agenda item

Revenue Budget Update 2025/26

Report of the City Treasurer

 

This report provides a high-level overview of the latest budget position for the Council in respect of its 2025/26 budget. Each scrutiny committee is invited to consider the officer developed options which are within its remit and to make recommendations to the Executive before it agrees to the final budget proposals in February 2025.

 

Minutes:

The Committee considered the report of the City Treasurer that provided a high-level overview of the latest budget position for the Council in respect of its 2025/26 budget. Each scrutiny committee was invited to consider the officer developed options which were within its remit and to make recommendations to the Executive before it agreed to the final budget proposals in February 2025.

 

Key points and themes in the report included:

 

·         Noting that the Council was forecasting an estimated budget shortfall of £101m in 2025/26, £126m in 2026/27, and £164m by 2027/28;

·         Mitigations approved in previous budget rounds included approved savings of £32m, the use of c£18m smoothing reserves in each of the three years, and a Council Tax increase of 4.99% (c£11m) a year. After these mitigations the gap reduced to £29m in 2025/26, £41m in 2026/27 and £77m by 2027/28;

·         Noting that councils faced a funding gap of £6.2 billion over the next two years, and this needed to be considered in the context of an estimated £24.5 billion in cuts and efficiencies in service spending that councils had made since 2010/11;

·         Noting that over the same period the Council had delivered over £440m of savings;

·         The 2023/24 outturn position reported to Executive 5 June 2024, reported an overspend of £5.3m. The second monitoring report of 2024/25 was considered by Executive on 13 November, reporting a forecast overspend of £20m. The ongoing implications of this overspend must be considered as part of the budget setting process;

·         Consideration of the Government’s Autumn Statement, noting that a key headline for Local Government was that Core Spending Power would increase by 3.2% in real terms in 2025/26;

·         Noting that Ministers had indicated additional funding would be targeted through a deprivation-based approach; and

·         A summary of the budget position, noting that the final budget position for 2025/26 would be confirmed at February 2025 Executive. This would be after the Finance Settlement was received and key decisions confirming the Council Tax and Business Rates tax base to be used to determine the collection fund position had been made in January.

 

Some of the key points that arose from the Committee’s discussions were:

 

·         Noting that the budget needed to be considered in the context of 15 years of Public Sector cuts and austerity;

·         Expressing concern regarding the use of reserves and the potential risk this potentially exposed the Council to, noting how important these had been during the local response to the Covid pandemic;

·         How would the funding from the Extended Producer Responsibility (EPR) packaging scheme be distributed across Greater Manchester;

·         When would the Council next receive a shareholder dividend from Manchester Airport; and

·         How did the budget and the associated officer proposals align with the Our Manchester Strategy (OMS).

 

The Executive Member for Finance and Resources said that the General Fund reserve balance at 31 March 2025 was forecast at £23.4m, adding that this was an appropriate level for Manchester. He said that any overspend, referring to the forecast overspend of £20m, would need to be met from this reserve fund and the General Fund reserve would need to be topped up in subsequent years. He commented that in previous years the dividend received from the Airport was used as smoothing reserves and could only be used once. He said that a dividend was not expected from the Airport in 2025/26 and possibly also not in 2026/27.

 

The Executive Member for Finance and Resources stated that details relating to the allocation of funding realised from the EPR were yet to be finalised and the spending of this funding would be in accordance with Department for Environment, Food and Rural Affairs guidance.

 

The Executive Member for Finance and Resources stated that following approval of a budget option, including Council Tax charges, these would be accompanied by an equality impact assessment and a statutory consultation. He clarified that that Council Tax assumptions were calculated on a Council Tax increase of 4.99% (c£11m) a year. The report described that a public consultation on proposed Council Tax levels and the savings measures put forward by officers would open on 25 November and run until 12 January 2025.

 

The Strategic Director (Neighbourhoods) commented that all of the officer proposals presented in the report had been developed using the principles of the OMS. He said the options presented efficiency savings, increased income generation and transformation of services, and little or no service reduction to contribute to delivering a balanced budget. In response to a specific question relating to savings to be achieved through purchasing green energy he said that further detail would be provided outside of the meeting.

 

The Head of Finance, Core and Place responded to a question raised in relation to the table presented at section 4.3 of the report and clarified that this presented the current overall Council position. He said that this information would be updated following the release of the Local Government Finance Settlement, expected towards the end of the month.

 

Decision

 

To note the report.

 

Supporting documents: