Report of the Deputy Chief Executive and City Treasurer attached

This report provides an overview of the one year Spending Round announcements made by the Chancellor of the Exchequer on 4 September 2019, and the potential financial implications for the City Council.

The Committee considered a report of the Deputy Chief Executive and City Treasurer, which provided an overview of the one year Spending Round announcements made by the Chancellor of the Exchequer on 4 September 2019, and the potential financial implications for the City Council.

The Deputy Chief Executive and City Treasurer briefly outlined the main points and themes within the report, which included:-

·                As a consequence of the current position with central government the full spending review and anticipated reforms associated with the Fairer Funding and Business Rates retention had been delayed for a further year which had led to significant uncertainty of future funding beyond 2020/21;

·                In Local Government terms, the announcement was the most positive recently and was described as a 4.3% real term growth (taking into account the council tax referendum and social care precept allowed increases), however, the additional grant funding was not confirmed beyond 2020/21 and there remained considerable risks around the levels of public spending overall, the distribution of funding across local government and between geographical areas, and the impact of anticipated business rates reforms and reset after 2020/21;

·                The main elements of the Chancellor’s announcement on Local Government finances and where applicable, specifically how this related to Manchester included:-

·                Council tax referendum threshold set at 2% plus an additional precept of 2% for Adult Social Care;

·                The distribution of the social care grant had taken into account the local council tax base which was favourable to Manchester; and

·                The Greater Manchester100% Business Rate pilot would continue for a further year.

·                The detail of the announcements would be confirmed in the Local Government Finance Settlement due in early December.  Local authority allocations for the increased social care grant had recently been published, which set out the policy choices around the distribution options;

·                Budget reports were planned for Scrutiny in January and February 2020; and

·                Going forward, there would be a need to review the requirements of the new Public Value Framework included in the Spending Round announcement, which meant there would be a greater focus on linking outcomes to use of resources.

The report was also scheduled to be considered by the Executive at its meeting on 16 October 2019.

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

·                Clarification was sought that the education resource settlement was for three years, given that that all other announcements were only for one year;

·                Did Officers know whether the Fair Funding Review would be taking Greater Manchester into account or was it safe to assume that the region could continue on 100% Business Rate retention;

·                Were there any areas in the Chancellors announcement that were not as expected;

·                Were there any potential schemes that the Council could put forward in order to try and secure some of the £0.2bn that was being made available by Government to deliver better outcomes where those outcomes relied on more than one part of the public sector; and

·                Clarification was sought as to whether a number of domestic violence and FGM initiatives which were currently funded by central government would continue to receive central government funding beyond March 2020.

The Deputy Chief Executive and City Treasurer advised that the Council did not know at the current moment whether the 100% Business Rate retention pilot would continue beyond 2020/21.  In terms of the education resource announcement, it was confirmed that his would be for three years but this would include a move to the national formula and it set out thresholds for funding, which some of the Schools in Manchester were already at.  In relation to the Fairer Funding Formula and the Spending Review there were key points around the social care grant, area cost adjustments and deprivation that the Council would wish to keep lobbying government over the course of the year.

The Committee was advised that the increase in Social Care funding was higher than expected.  There was still a degree of uncertainty as to whether everything that was proposed in the Chancellors announcement would come through in the financial settlement and that the spending round only addressed current and forward-looking pressures.

The Deputy Chief Executive and City Treasurer advised that at present, details around the proposed £0.2bn grant funding were unknown and it was unclear whether any of this would come direct to Manchester or to Greater Manchester.  It was also explained that the Spending Round Announcement provided a high level funding picture and the finer details in terms of individual grant programmes could not yet been determined until the financial settlement had been received.

The Executive Member for Finance and Human Resources commented that the additional funding for Social Care was welcomed.

Decision

The Committee notes the report