Agenda item

Agenda item

The Council's Updated Financial Strategy and Budget reports 2020/21

Report of the Chief Executive and the Deputy Chief Executive and City Treasurer attached.

 

This report provides an update on the Council’s overall financial position and sets out the next steps in the budget process, including scrutiny of the budget proposals and budget report by this Committee.

 

Each Scrutiny Committee will receive a budget report aligned to its remit, showing the main changes proposed to delivery and funding.  The report also outlines the proposals for how the Council could deliver a balanced budget for 2020/21, the details of which will be discussed at the relevant scrutiny committees.

Minutes:

Further to Minute RGSC/20/02, the Committee considered a report of the Deputy Chief Executive and City Treasurer which provided a further update on the Council’s financial position and set out the next steps in the budget process. 

 

In conjunction with the above, the Committee also received and considered the Corporate Core medium term financial plan (MTFP) and budget proposals for 2020/21, the Council’s Capital Strategy and Budget 2019/20 to 2023/24 and the Housing Revenue Account 2020/21 to 2022/23.

 

The Committee was invited to consider and make recommendations on the budget proposals which were within the remit of the Committee prior to their submission to the Executive on 12 February 2020.

 

In relation to the Council’s updated Financial Strategy and Budget 2020/21, some of the key points that arose from the Committees discussions were:-

 

·                There was concern with regard to the ‘Fair Funding Review’ that following research by the Personal Social Services Research Unit (PSSRU), there was a potential reduction in future funding of circa 14% in relation to Adult Social Care funding in Manchester and an assurance was sought that the Council would continue to lobby government on the ‘Fair Funding Review’;

·                Was social deprivation taken into account as part of the ‘Fair Funding Review’;

·                How had the contribution of just over £2m to the Business Rates reserves been determined, what was the existing level of this reserve and how did this compare to other Greater Manchester local authorities; and

·                Clarification was sought as to how the potential increase in income of £1m in 2020/21 relating to Housing Benefit for temporary accommodation would be derived.

 

The Deputy Chief Executive and City Treasurer assured the committee that the Council was making substantial representations to government on the potential implications of the ‘Fair Funding Review’ and the changes proposed in terms of Adult Social Care funding in Manchester were deeply concerning. 

The Deputy City Treasurer advised that the Fairer Funding Review was more population based and not deprivation based, which was often a key indicator in the level of need in respect of Adult Social Care.

 

The Deputy City Treasurer explained that the additional contribution to the Business Rate reserve was derived from the additional £3.7m growth in Business Rates income, of which £1.7m was to be set aside to meet the demand pressures within Children’s Services, with the remainder to be placed in the Business Rates reserve.  At present the total value of this reserve was approximately £19m. In terms of comparisons to other local authorities, it was agreed that this information would be provided to the Committee after the meeting.

 

The Deputy City Treasurer advised that the potential additional £1m income would be derived from the ability to claim Housing Benefit for temporary accommodation based on a small scale transfer of existing properties to be managed by Registered Providers (RPs). It was reported that this additional income would be reinvested in the service.

 

In respect of the Corporate Core Budget Report 2020/21, some of the key points that arose from the Committees discussions were:-

 

·                Would the anticipated £50k saving through collaborative work with other local authorities in regards to capital programmes be achieved this financial year and who were these other local authorities;

·                Assurance was sought that with the removal of long term vacant posts, this would not impact on service delivery and staff morale;

·                What were the ongoing pressures to the Coroner’s Service that required a further £400k mitigation and whilst acknowledging the that the Coroners Service was independent from the Council, why was it not being required to make a savings contribution;

·                In relation to commissioning and procurement, what was the nature of the specialist audit work referred to in the report;

·                Assurance was sought that any savings within Revenues and Benefits did not impact on the ability for residents to contact the Council through the shared service centre;

·                In Table 1 within the report, why was the budget for the capital programme reducing;

·                What was the reason for the uplift in costs within the existing Business Support arrangements;

·                What was the nature of the additional transitional costs as part of the changeover arrangements to the new contractor for the repairs and management works for the Corporate Estate and clarification was sought as to whether it was correct that the new contractor was required to find ways in reducing this cost;

·                Had the feasibility study been undertaken yet for the provision of a further public convenience within the city centre; and

·                Further information was sought on the proposed funding for zero carbon staffing and the bringing forward of the pension fund contribution.

 

The Deputy Chief Executive and City Treasurer advised that the Council had an agreement with one particular local authority in Greater Manchester to collaborate on capital programmes to strengthen the capacity of delivery, which centred around improvements to their capital checkpoint process and planning and delivery of some of their capital schemes. 

 

It was explained that across a number of service areas in the Corporate Core, vacant posts had been budgeted at the top of their grades which would never be filled at this level and accordingly the turnover factor had been adjusted to ensure budgets were not being held where they were not required. Secondly, a review had been undertaken of long term vacancies and were no longer required, these posts had been removed from the staff structures

 

The Head of Finance advised that in terms of the Coroners Service that the additional funding was required to deal with an increase in complex cases and the Deputy Chief Executive and City Treasurer agreed to circulate the trend data around the cases and complexity to Members after the meeting.

 

The Deputy Chief Executive and City Treasurer explained the nature of the specialist audit work that had been undertaken, and advised that this was reported to the Council’s Audit Committee on an annual basis.  She also advised that any savings derived from a review of the Shared Service Centre would come from the changes in how the Council operated and the removal of any long term vacancies.

 

The Head of Finance advised that Table 1 within the report detailed the revenue budget of the capital programme which was an income target and the reduction was as a result of adjustments to the budget.  Assurance was given that there was no direct impact on the capital programme resulting from this reduction.  He also advised that the uplift in costs within the existing Business Support arrangements was a result of a number of additional posts being created to help support additional needs and also as a result of increases of salaries of existing posts due to the complexity of the work required.

 

The Deputy City Treasurer confirmed that it was part of the contract with the new contractor for the repairs and management works for the Corporate Estate that they were required to improve quality and deliver efficiencies once they start the contract.  The transitional costs related to the TUPE process of staff that transferred over form the original contractor to the new contractor.

 

The Deputy Chief Executive and City Treasurer commented that there had been no formal work undertaken around a further public convenience in the city centre but the feasibility of this was being looked at.

 

The Deputy City Treasurer explained that by bringing forward the pension fund contribution, this would result in an additional £750,000 saving over each of the next three years.

 

The Deputy Chief Executive and City Treasurer advised that in terms of zero carbon staffing, there would be a further two FTE posts recruited to and the Council had underwritten the cost of the Chief Executive post of the Climate Change Agency for a year in recognition if its importance.  Additional funding had also been identified for the need to draw in the expertise that was required.

 

In relation to the Council’s Capital Strategy and Budget 2019/20 to 2023/24 some of the key points that arose from the Committees discussions were:-

 

·                In terms of carbon reduction proposals, how was the Council going to determine what measures to invest in, given a number of the measures would be expensive to implement and a number funding commitments had already been made for the next four years;

·                There was concern in regards to the implications to the Council and the Highways infrastructure following the recent announcement by the Prime Minister to prohibit the sale of petrol, diesel and hybrid vehicles by 2035;

·                Was there an opportunity to advocate that the Council was planting more trees to contribute towards addressing issues of carbon dioxide emissions;

·                Was there any potential for private tenants and/or corporate landlords to be part of the Civic Quarter Heat Network;

·                Was there any possibility to identify a budget for small works packages relating to highways improvements;

·                There was still concern that there was no identified funding for Highways capital programme from 2022 onwards;

·                In relation to investment in car park assets, was there any update on the NCP Joint Venture;

·                There was concern that the cost of some of the carbon reduction proposals, such as the retrofit works to make existing housing stock zero-carbon and the ambition to deliver carbon efficient schools would be too expensive for the Council to implement; and

·                It was commented that whilst reducing carbon emissions was an important duty on the Council, there was a need to ensure that this did not result in other important areas becoming overlooked, such as the fire safety of high rise properties.

 

The Deputy Chief Executive and City Treasurer explained that the report only detailed capital schemes that had already approved through the checkpoint process and, as such, it did not list everything that the Council would be delivering.  It was also explained that the report also set out the priorities for the decisions around future investment for the next three to five years and as the Carbon Reduction Action Plan developed, specific costing proposals would be incorporated into the capital strategy.

 

It was acknowledged that whilst the announcement by the Prime Minister would have an impact on the Council and the Highways network, the Deputy Chief Executive and City Treasurer referenced several pieces of work being undertaken that would look to contribute towards addressing the consequences of the announcement.  It was also reported that in terms of the Civic Quarter Heat Network, there was the intention for private tenants and/or corporate landlords to be incorporated in its use.

 

The Executive Member for Finance and Human Resources commented that he was in early discussions with members of the Neighbourhoods and Environment Scrutiny Committee around identifying a small budget that could be used to support small works highways investment, however, he clarified that this would not be a secondary highways budget.  The Deputy Chief Executive and City Treasurer confirmed that investment in the City’s highways network was still a priority for the Council, but as a significant amount of funding was received from central government, it was not possible to factor in specific programmes into the capital strategy until the funding became available.

 

The Deputy City Treasurer advised that work was still on going with the NCP Joint Venture and agreed circulate the timescale of the replacement of the Joint Venture with NCP to members following the meeting.

 

The Deputy Chief Executive and City Treasurer commented that discussions were underway with the DfE around future funding for the delivery of carbon efficient schools and the Council was also exploring external funding streams to contribute to the cost of the retrofitting of Council housing and operational estates.

 

In relation to the Housing Revenue Account 2020/21 to 2022/23 some of the key points that arose from the Committees discussions were:-

 

·                Would the proposed rent increases still be within the Local Housing Allowance rate; and

·                Why was there a variance in heating charges at different schemes.

 

The Head of Finance advised he would provide confirmation that the proposed rent increases were within the Local Housing Allowance rate.  The Head of Housing explained that the variance in heat charges was based on the consumption in previous years and were set to try and cover the anticipated consumption.

 

Decisions

 

The Committee recommends that their comments be submitted for consideration by the Executive at their meeting on 12 February 2020, and in doing so, notes the proposed recommendation’s to the Executive relating to the Capital Strategy and Budget 2019/20 to 2023/24 and the Housing Revenue Account 2020/21 to 2022/23, those being:-

 

·                Capital Strategy and Budget 2019/20 to 2023/24

 

The Executive is requested to:

 

(1)     Approve and recommend the report to Council, including the projects for Executive approval in section 6.2.

(2)     Note the capital strategy.

(3)     Delegate authority to the Deputy Chief Executive and City Treasurer in consultation with the Executive Member for Finance and Human Resources to make alterations to the schedules for the capital programme 2019/20 to 2023/24 prior to their submission to Council for approval, subject to no changes being made to the overall estimated total cost of each individual project.

 

·                Housing Revenue Account 2020/21 to 2022/23

 

The Executive is recommended to:

 

(a)     Note the forecast 2019/20 HRA outturn as set out in section 4.

(b)     Approve the 2020/21 HRA budget as presented in Appendix 1 and note the indicative budgets for 2021/22 and 2022/23.

(c)     Approve the proposed 2.7% increase to dwelling rents, and delegate the setting of individual property rents, to the Director of Housing and Residential Growth and the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Housing and Regeneration and the Executive Member for Finance and Human Resources.

(d)     Approve the proposal that where the 2020/21 rent is not yet at the formula rent level, the rent is revised to the formula rent level when the property is relet.

(e)     Approve the proposed 2020/21 changes for communal heating charges as detailed in paragraphs 5.15 to 5.19.

(f)      Approve the proposed 2020/21 Northwards management fee as detailed in paragraphs 5.27 to 5.28.

(g)     Approve the proposed increase in garage rental charges as outlined in paragraph 6.1

Supporting documents: