Presentation of the Deputy Chief Executive and City Treasurer

The Committee received a presentation from the City Treasurer (Deputy Chief Executive), which provided an overview of income generating activities within the Council with a focus on what the Council proactively did to generate income, what more could be done in the future, and what other models exist. 

The main points and themes within the presentation included:-

·                Local Authorities had traditionally received fees and charges for the provision of services.  These could be split into statutory or discretionary services;

·                Local Authorities did not always control the level of fees that were charged.  For statutory services the fee levels were often set by Government (eg. planning fees);

·                During the years of austerity, income generation as well as reduced spending had been a key consideration;

·                There needed to be a balance between risk/reward when considering income opportunities;

·                A breakdown of budgeted income and actual income across key areas of the Council for 2018/19 and the projected income for 2019/20 within these areas; and

·                The opportunities that potentially existed for further income generation in the future and key issues that would possibly have an impact on these.

Some of the key points that arose from the Committees discussion were:-

·                Did (or could) the income generated from parking include income from residential parking schemes;

·                How was it anticipated to generate a further £1 million income from bus lane enforcement when it was anticipated that there would be change in driver behaviour;

·                Had any additional bus lanes been introduced to help achieve this additional projected income and what account had been taken into consideration in regards to a number of highways major projects being behind schedule which might contain additional bus lanes that would contribute to this enforcement income;

·                Clarification was sought as to whether budget underspends were considered as income in future years;

·                The report did not reflect or explain how much surplus was made from income generating services with reference made to the income generated by Legal and Democratic Services and it was asked what this income was used for;

·                Did the Council cover its costs for services that it provided on behalf on other local Authorities;

·                What was the additional one off income from the investment estate;

·                Considering some services (Facilities Management and Other Core Services) had only generated half of their expected 2018/19 budget income, had these services covered their costs and how was the level of income projected for 2019/20 considered realistic or achievable;

·                Was there any specific reason why the 2019/20 projected income figures were just slightly below the actual income figures for 2018/19;

·                It was felt that it would have been helpful if Members had been provided with information on where particular income streams had stipulations as to what they could or could not be spent on;

·                It was felt that there needed to be some clarity around why the Council undertook certain services which were generating income, as not all services were used purely to generate a financial return, but rather it provided a strategic and/or community need for the city;

·                It was considered that the information presented to the Committee did not contain enough detail to gain a true understanding of income generation across key areas, future opportunities around innovation and possible income these opportunities may offer, a distinction between those cores services the Council provided for social reasons and those it provide solely to make profit and what other local authorities were doing around this which the Council could possibly emulate and as such a more detailed report should be submitted to a future meeting; and

·                It would be interesting to see the amount of money the Council had accrued since its inception as Manchester Corporation and what this had generated for the Council.

The Head of Finance advised that there was opportunity to fund some activities within parking through income generated from residential parking schemes which would be contained within a report going before the Council’s Executive later in the month.  He advised that in terms of income from bus lane enforcement, the Council had been prudent in its assumptions with the fact that drivers would learn and change their behaviours and as such in future years it was expected that the income expected from this area would reduce.  He also advised that the 2019/20 projected income included the net amount after what had been placed into Council reserves.  In response to clarification of this, The Head of Finance explained that the Council was restricted on what it could use this income for and any surplus generated over the agreed budgeted amount went into a ring-fenced reserve for parking and bus lane enforcement.  He advised that additional bus lane related income had been factored into the income figures for 2019/20 but there was nothing assumed in the forecast for new bus lanes going forward.  On this issue, the Executive Member for Finance and Human Resources clarified that there had been an underspend within bus lane enforcement for 2018/19 which had subsequently been included in the projected income for 2019/20. 

The City Treasurer (Deputy Chief Executive) explained that the figures contained within the presentation related to the income that was credited to the Council’s revenue budget.  It was explained that bus lane and parking enforcement was quite a volatile area of income and was also tightly defined by statute as to what this income could be used for.  This income was placed into reserve and the Council drew down a set amount each year to support the revenue budget.  The Chair expressed concern that whilst understanding the complexity associated with the Council’s income and the Council’s revenue budget, the information contained within the presentation was not clear on this matter.

The City Treasurer (Deputy Chief Executive) advised that the Council had been prudent in its assumptions around income generation from bus lane enforcement in 2018/19.  Taking into account the costs eligible to be funded from the bus lane enforcement reserve, it had been determined that a higher level of reserve could be used to help support the budget for the next few years, which had been factored into the budget setting process for 2019/20.

The Executive Member for Finance and Human Resources acknowledged the point on the need for clarity around why the Council undertook certain services which generated the income and agreed that, if minded to, the Committee could receive a future report on this.

The City Solicitor explained that the Council had restrictive requirements when it was providing services for other local authorities.  These services were only provided where it was clear that they would generate further income for the Council, however, due to legislative requirements, the Council was not allowed to make excessive amounts of surplus on these services.  She reassured the Committee that in providing these services, the income generated was in excess of the associated costs.

The Head of Finance advised that the one off investment estates income in 2018/19 was in relation to a lease arrangement with Manchester Airport for land use for car parking and this had been reflected in the budget reports for 2019/20 which had been considered earlier in the year.

In terms of the income generation for Facilities Management, the lower than forecasted amount generated was in part as a result of the adjustments to the Town Hall budget, specifically in relation to the loss in catering income.  It was acknowledged that the projected 2019/20 budget income generation figure had been overstated and although this would be offset by a draw down from the reserve for the Town Hall Project budget, this figure needed amending.  The Executive Member for Finance and Human Resources commented that the loss of income from Town Hall activities had always been factored into the overall Town Hall Project budget.  The City Treasurer (Deputy Chief Executive) also advised that as part of a previous budget setting process in relation to the Town Hall Project, a revenue reserve had been set up to meet the loss in this income.  In terms of the proposed increase in budget income generation within Core Support Services for 2019/20, the Head of Finance agreed to provide details to the Committee as to how the increase would be achieved.

The Committee was advised that it was not Council policy to set future budgets at a level just below the current year’s income and number of factors were taken into account when determining the Council’s budgets, including previous years’ performance, known demand and the need to consider any known expenditure. 

The City Solicitor advised that any additional surplus generated by Legal and Democratic Services was re-invested into the service to help support the cost of the whole service.  She explained that the Council was clear in its negotiations with all of its partners and careful business planning was undertaken to ensure that the there was an appropriate resource available to support any additional work undertaken.  The City Solicitor agreed to provide responses to queries around the shortfall in actual income for 2018/19 and the projected level of income to be generated in 2019/20 for by Legal and Democratic Services as part of a more comprehensive report.

The City Treasurer (Deputy Chief Executive) commented that the aim of the presentation was to provide an overview of the Councils income, the different categories of income and legislative background for particular parts including the issue around trading and profit.  She and Officers noted the Committees views around the level of detail requested to be included in a future report around income generation across key areas, future opportunities around innovation and possible income these opportunities may offer, a distinction between those cores services the Council provided for social reasons and those it provide solely to make profit and what other local authorities were doing around this which the Council could possibly emulate.

Decision

The Committee:-

(1)       Notes the presentation.

(2)       Notes that the Head of Finance will provide information on how the proposed increase in budget income generation within Core Support Services for 2019/20, will be achieved.

(3)       Requests Officers produce a further report that provides a greater level of detail on income generation across the key areas, including responses to queries around the shortfall in actual income for 2018/19 and the projected level of income to be generated in 2019/20 for Legal and Democratic Services; future opportunities connected to innovative income opportunities; distinctions between the amount of income generated from cores services the Council provides for social reasons and those it provides solely to make profit and what other local authorities are doing around income generation which the Council could possibly look to emulate; and

(4)       Agrees that the Chair, in consultation with the City Treasurer (Deputy Chief Executive) will determine an appropriate date at which this repot shall be considered.