The report of the Deputy Chief Executive and City Treasurer is now enclosed.

A report submitted by the Deputy Chief Executive and City Treasurer set out the budget position for 2020/21 based on the outcome of the Provisional Local Government Finance Settlement. The report described the issues that would need to be taken into account prior to the Council finalising the budget and setting the Council Tax for 2020/21. By making carbon reduction a key consideration in the Council’s planning and budget proposals, the proposed 2020/21 budget was also to respond to the climate emergency that the Council had declared (Minute CC/19/52).

Due to the announcement of a one-year spending round by government, the City Council was intending to publish a single year budget for 2020/21 only. It would, however, continue to plan for a three-year position based on the best information available.

The earlier version of this report that had been considered by the scrutiny committees had forecast a small surplus of £256k for the 2020/21 budget (minutes HSC/20/02, RGSC/20/02, NESC/20/04, CESC/20/02, ESC/20/02 and CYP/20/03).

That version had been based on the information available at the time that report was prepared including the government funding announcements in the September Spending Round; the technical provisional settlement consultation released early October; the forecast changes to spend including the impact of expected increases to the National Living Wage, pension contribution costs, the waste levy and other pressures; and identification of savings and efficiencies to support the overall financial position.

In developing the 2020/21 budget net savings of £2.837m had been identified as follows:

The details underlying each of these savings proposals were set out in an appendix to the report.

The report then outlined the key changes to the financial situation since the scrutiny committee version of the report had been prepared. The announcement of the 2020/21 Local Government Provisional Finance Settlement had been in late December 2019. The funding level announced in that was largely a roll-over settlement with some inflationary increases and specific increases for Social Care. The provisional settlement had confirmed all of the announcements in the 2020/21 Spending Round and the report explained all the key elements and changes that had been in the announced settlement. The government was assuming that the City Council would increase the council tax precept by 3.99%, made up of a general precept element of 1.99% and the specific social care precept element of 2%. However, the eventual increase to Manchester residents might be higher as it would also include any changes to the Greater Manchester Mayoral precept and the Police precept.

The impact on the Council’s financial position of the recent budget announcements was broken down as follows:

These changes would still enable a balanced budget to be achieved for 2020/21, with the forecast surplus dropping to £167K, as follows:

This was not likely to be the final position proposed in February as further changes were anticipated. These included

·         Confirmation of the redistribution of the surplus held in the national levy account in 2019/20, which should be confirmed in the final settlement.

·         Public Health allocations were yet to be confirmed. The Spending Round had announced a real terms increase to the Public Health Grant budget, expected to be 2.63%, an increase of £1.328m.

·         The Spending Round had also announced a additional £40m funding for Discretionary Housing Payments to tackle affordability pressures in the private rented sector in England and Wales. The allocation of that fund to individual authorities were yet to be announced.

·         The Conservative Party General Election manifesto had announced £500m funding for a Potholes Fund and an allocation from that was anticipated.

Given these uncertainties there was no assurance that the final budget would retain the small surplus. The Executive agreed to recommend that any projected surplus would be used to improve the physical environment.

It was confirmed that the Council would be consulting on increasing the City Council element of the Council Tax by 3.99%, 1.99% plus the 2% for social care. It was intended that all the additional revenue raised by that extra 2% would be allocated to investing in learning disability support services.

The report outlined the future stages of the budget’s development leading up to the budget and Council Tax setting meeting of the Council on 6 March 2020.

Decisions

1.         To agree the proposals in this report as the basis for the 2020/21 budget.

2.         To note that the financial position has been updated to reflect the provisional Local Government Finance Settlement issued on 20 December 2019.

3.         To note that the detailed budget reports were considered by the six Scrutiny Committees over the period 7-9 January, setting out the investment and savings proposals for each Directorate.

4.         To note that the full suite of budget reports would be presented to the Executive meeting on 12 February 2020.

5.         To recommend that any projected surplus would be used to improve the physical environment.