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

The report of the Chief Executive and City Treasurer set out the revenue budget proposals for 2020/210 based on the outcome of the Provisional Local Government Finance Settlement and the issues which needed to be taken into account prior to the Council finalising the budget and setting the Council Tax for 2020/21.

 

In March 2019, as part of setting the 2019/20 budget, it had been anticipated that there would be a government spending review in 2019/20 and that the local government finance would then return to a three-year budget cycle starting in 2020/21. That had not happened, and the announcements for 2020/21 funding levels had again been for one year only, therefore the proposed budget was for 2020/21 only. The report outlined the key changes in funding that had been part of the government’s funding announcements. New budget pressures had arisen, revised savings and cost recovery proposals had been developed, and further sources of money had been identified or grants provided. The total saving and efficiencies target being proposed for 2020/21 was £7.5m. The 2020/21 budget now being put forward had a total funding requirement of £665.1m, compared to the original 2019/20 budget requirement of £610.835m. The comparison of the two proposals being:

 

Table 1 - Comparison of Budgets	2019/20 Original £0000	2019/20 Revised £000	2020/21 Proposed £000
Resources Available:
Business Rates Related Funding	314,653	314,653	339,547
Council Tax	166,507	166,507	174,465
Other non ring fenced Grants	54,426	65,752	66,717
Dividends and Use of Airport Reserve	62,390	62,390	62,890
Use of Other Reserves	12,859	12,859	21,481
Total Resources Available	610,835	622,161	665,100
Resources Required:
Corporate Costs:
Levies and Statutory Charge	69,990	69,990	71,327
Contingency	1,600	850	860
Capital Financing	44,507	44,507	44,507
Transfer to Reserves	7,067	18,393	18,338
Sub-Total Corporate Costs	123,164	133,740	135,032
Directorate Costs:
Additional Allowances and other pension costs	10,030	10,030	9,580
Insurance Costs	2,004	2,004	2,004
Inflationary Pressures and budgets to be allocated	9,945	1,764	10,271
Directorate Budgets	465,692	474,623	508,213
Sub - Total Directorate Costs	487,671	488,421	530,068
Total Resources Required	610,835	622,161	665,100
Shortfall / (surplus)	0	0	0

 

This budget was based on the assumption that the Council’s element of Council Tax would increase by 1.99% along with a further 2% specifically for adult social care. When the Greater Manchester Council Tax precept increases were added to the Council’s own the total increase for Manchester’s Council Tax Payers was anticipated as being 4.78%.

 

The assumption for the council tax collection rate was 96.5%. This was based on historic trends in collection as council tax due in the current year will continue to be collected over a number of years.

 

The report explained that the Government issued a written ministerial statement detailing new business rates reliefs for 2020/21. That had increased retail relief from 33% to 50% and included an extension of the relief to music venues and cinemas, as well as the continuation of pub and local newspaper relief. The additional relief was forecast to be £3.02m and would be reimbursed by Section 31 grant from the government.

 

The report provided a breakdown of the other non-ringfenced grants and contributions included in the budget and the issues around the most significant grants and contributions were described.

 

Table 2 - Other Non-Ringfenced Grants and Contributions	2020/21 £000
Better Care Fund (Improved)	30,815
Children's and Adult's Social Care Grant	17,564
New Homes Bonus	8,864
Contribution from MHCC	4,000
Education Services Grant	1,260
Housing Benefit Admin Subsidy	2,514
Council Tax Support Admin Subsidy	863
Care Act Grants	162
Business Rates Returned Levy	675
Total Non Ring-Fenced Grants	66,717

 

The report then considered the expenditure proposals. The forecast of levy payments the Council would have to make to other authorities in 2020/21 was:

 

Table 3 - Levies	2020/21 £000
Transport  Levy	37,476
GMCA Waste Services	30,051
Environment Agency	224
Probation (Residual Debt)	15
Magistrates Court (Residual Debt)	9
Port Health Authority	71
Net Cost of Levies	67,846
Potential Payment to GMCA	3,481
Total	71,327

 

Although included within the table of levies, the Waste Levy was administered by the Neighbourhoods Directorate and would be included within the Directorate’s budget.

 

It was explained that the potential payment to GMCA related to the bus reform proposals that were under consideration at this time (Minute Exe/19/101). The financial case for the bus reform proposals included a full assessment of how the GMCA could afford to make and operate the proposed scheme. The Council’s potential share of the local authority element of the overall support package had been assessed as £3.481m.

 

A proposed contingency provision of £0.86m included £0.26m in relation to risks around the waste levy and collection and £0.6m as an unallocated contingency to meet future unforeseen expenses.

 

The proposed Insurance costs of £2.004m related to the cost of external insurance policies as well as contributions to the insurance fund reserve for self-insured risks.

 

The capital financing budget of £44.507m would support the costs of borrowing including interest costs and the minimum revenue provision, plus contributions to the capital financing reserve for revenue funding of the programme. Of this £25.114m would be funded by interest received on loans made by the Council to Manchester Airport Group and other partner organisations.

 

Specific transfers to reserves of £18.338m in 2020/21 were being proposed, and those were listed in the report.

 

Allowances of £9.58m had also been made for retired staff and teachers’ pensions to meet the cost of added-years payments awarded to former employees.

 

The report explained the main assumptions that had been made when calculating provision to be made for inflation and other anticipated costs. These could not, at this point in time, be allocated to Directorate or other budgets. They would instead be allocated throughout the coming year. The total provision being proposed was £10.271m, broken down into:

 

Table 4 - Inflationary pressures and budgets to be allocated	2020/21 £000
Non Pay Inflation	2,361
Pay Inflation including national living wage	6,520
Pension Contribution reduction	-800
Apprenticeship Levy 0.5%	900
Capacity for further budget pressures (including domestic violence)	1,000
Digital City work	250
Contribution to Cemeteries Reserve	40
Total	10,271

 

The allocation relating to the pooled budget had been included within Adult Social Care cash-limit budget as follows:

 

Table 5 - Inflationary pressures and budgets to be allocated in the Pooled Budget	2020/21 £000
National Living Wage	4,400
Pay inflation	1,530
Non-pay inflation	2,413

 

The proposals for the Directorates’ cash limit budgets were detailed in the Directorate Budgets 2020/21 reports that were also being considered at the meeting (Minute Exe/20/16 below). The overall position was:

 

Table 6 – Departmental Cash Limit Budgets	Gross 2020/21 £000	Net 2020/21 £000
Children’s Services	464,099	130,320
MHCC Pooled Budget	267,787	216,864
Adult Social Care - Services out of scope of Pooled Budget	7,243	4,389
Homelessness	36,459	15,285
Corporate Core	310,196	69,960
Neighbourhood  Directorate	164,204	63,751
Growth and Development	55,314	7,644
Total	1,305,302	508,213

 

The figures in the table for the Neighbourhood Directorate do not include the waste levy of £30.051m as that is shown above in Table 3 above.

 

The report explained that the Council holds a number of reserves, all of which, aside from the General Fund Reserve, had been set aside to meet specific future expenditure or risks. A fundamental review of all the reserves held had been carried out as part of the budget setting process. The reserves include:

·         Reserves that have been identified to directly support the proposed budget position

·         Statutory reserves – such as the Bus Lane and Parking Reserves, where the use of these monies is defined in statute

·         PFI Reserves – held to meet costs across the life of the PFI schemes

·         Reserves to offset risk and manage volatility – such as the Insurance Fund Reserve, and reserves to smooth volatility in for example adult social care placements due to winter pressures

·         Schools reserves – schools funding which the Council cannot utilise

·         Reserves held to support capital schemes

·         Reserves to support economic growth and public sector reform

·         Grants and contributions which fall across more than one year – following local authority accounting standards these are held in a reserve

 

The report set out the planned use of reserves in 2020/21 to support revenue expenditure. It also explained the statutory requirement to place income generated from on-street parking and bus lane enforcement into separate reserves. These reserves could only be used to fund certain types of highway and environmental improvements, and provided there was no requirement for the Council to provide additional off street parking or for financial support to existing off street parking. The expected balance on these reserves at the 1 April 2020 was £16.965m. It was estimated that £9.951m would be added to these reserves during 2020/21 and £9.579m used. The reserves were to be used in accordance with the requirements to fund spending in the Neighbourhoods Directorate as well as part of the transport levy.

 

The total planned use of reserves was:

 

Table 7 - Use of Reserves	2020/21 £'000
?Reserves directly supporting the revenue budget:
Budget smoothing reserve	7,066
Bus Lane (supporting Transport Levy)	3,092
Social Care Investment Reserve	7,135
Adult Social Care	2,150
Anti Social Behaviour Team Reserve	540
Business Rates Reserve	1,165
Transformation Reserve	333
Sub Total	21,481
Statutory Reserves:
Bus Lane Enforcement and Parking reserves	6,487
Other Statutory Reserves	436
Balances Held for PFI's	375
Social Care Reserves :
Adult Social Care Reserve	3,395
Reserves held to smooth risk / assurance:
Airport Dividend Reserve	47,080
Business Rates Reserve	2,000
Other Reserves held to smooth risk / assurance	3,139
Reserves held to support capital schemes:
Capital Fund	10,366
Investment Reserve	2,325
Eastlands Reserve	5,682
Other reserves held to support capital  schemes	1,061
Reserves held to support growth and reform:
Better Care Reserve	1,273
Town Hall Reserve	3,185
Our Manchester Reserve	2,556
Other Reserves to support growth and reform	1,332
Grants and Contributions used to meet commitments over more than one year	2,048
Small Specific Reserves	982
Total	115,203

 

The planned uses of the Social Care Investment Reserve and the Adult Social Care were detailed in the report.

 

The Anti-Social Behaviour Team Reserve had arisen from budget amendments considered and approved by the Council in March 2019 (Minute CC/19/18).

 

It was explained that to maintain annual funding of £1.5m to support the Factory/Manchester International Festival it was being proposed that £0.5m be retained in the mainstream budget with the remaining requirement being held in a reserve to cover ten years. This reserve would be increased to the required balance using Council Tax surpluses and Business Rates surpluses. Authority was therefore sought and granted for the Chief Executive and the City Solicitor, in consultation with the Executive Members for Finance and Human Resources and Culture, to enter into a 10 year grant agreement with Manchester International Festival that would be subject to on-going confirmation of the corresponding funding from Arts Council England.

 

The workforce implications of the budget proposals were outlined in the report. The proposals above will require the deletion of 16.4 FTE posts which would be achieved by the deletion of vacant positions. The detailed proposals were set out within the Corporate Core directorate report that was also being considered at the meeting (Minute Exe/20/16 below).

 

Decisions

 

1.         To note that the financial position has been based on the Final Local Government Finance Settlement announced on 6 February together with any further announcements at that date.

 

2.         To note that there has been a review of how the resources available are utilised to support the financial position to best effect, including use of reserves and dividends; consideration of the updated Council Tax and Business Rates position; the financing of capital investment, and the availability and application of grants.

 

3.         To note the anticipated financial position for the Authority for the period of 2019/20 to 2020/21 which was based on all proposals being agreed.

 

4.         To note that the Capital Strategy and Budget 2019/20 to 2023/24 was also presented to this meeting (Minute Exe/20/14 below).

 

5.         To note the Deputy Chief Executive and City Treasurer’s review of the robustness of the estimates and the adequacy of the reserves as set out in the Budget Overview (Minute Exe/20/12 above).

 

6.         To recommend to Council as part of the budget for 2020/21:

 

a)         an increase in the basic amount of Council Tax (i.e. the Council’s element of Council Tax) by 1.99%. The Council has consulted on the 2% Adult Social Care precept increase. If agreed, it is proposed to prioritise this resource to support adults with learning disabilities to help meet the increased need and complexity of residents;

 

b)         the contingency sum of £0.860m;

 

c)         corporate budget requirements to cover levies/charges of £71.327m, capital financing costs of £44.507m, additional allowances and other pension costs of £9.580m and insurance costs of £2.004m;

 

d)         the inflationary pressures and budgets to be allocated sum of £10.271m; and delegate the final allocations to the Deputy Chief Executive and City Treasurer in consultation with the Executive Member for Finance and Human Resources. The Manchester Health and Care Commissioner (MHCC) elements of these costs have already been included in the Pooled Budget. The use of these budgets will be agreed with the MLCO Partnership Board, which has representation from all key partners, along with identifying whether any more formal approvals are required in line with the Council’s key decision thresholds.

 

e)         the estimated utilisation of £9.579m in 2020/21 of the surplus from the on street parking and bus lane enforcement reserves, after determining that any surplus from these reserves is not required to provide additional off street parking in the authority; and

 

f)          the planned use of, and movement in, reserves as identified in the report, subject to the final call on reserves after any changes are required to account for final levies.

 

7.         To recommend that Council approve and adopt the budget for 2020/21.

 

8.         To delegate authority to the Deputy Chief Executive and City Treasurer and Chief Executive to agree the use of the Adult Social Care Reserve in consultation with the Executive Members for Finance and Human Resources and Adult, Health and Wellbeing.

 

9.         To delegate authority to the Deputy Chief Executive and City Treasurer and Chief Executive to agree the use of the Social Care Reserve in consultation with Executive Members for Finance and Human Resources and Children's Services.

 

10.       To authorise the Chief Executive and the City Solicitor, in consultation with the Executive Members for Finance and Human Resources and Culture, to agree the detailed terms of a 10 year grant agreement with Manchester International Festival (MIF), subject to confirmation of funding from Arts Council England (ACE) and having entered into a funding agreement with ACE.

 

11.       To approve the gross and net directorate cash limits as set out in Table 6 above.

 

12.       To approve the in principle contribution to the MHCC Section 75 (S75) Pooled Budget subject to the approval of the S75 Agreement.

 

13.       To delegate authority to the Deputy Chief Executive and City Treasurer and Chief Executive in consultation with the Executive Member for Finance and Human Resources and the Leader of the Council to draft the recommended budget resolution for budget setting Council in accordance with the legal requirements outlined in this report and to take into account the decisions of the Executive and any final changes and other technical adjustments.

 

14.       To note that there is a requirement on the authority to provide an itemised council tax bill which, on the face of the bill, informs taxpayers of that part of any increase in council tax which is being used to fund adult social care; and to provide specific information about the purpose of the council tax increase in the information supplied with demand notices.

 

15.       To approve implementation of new business rate reliefs in 2020/21 as announced by Government, which will increase the retail relief offering, extending it to music venues and cinemas, as well as, the continuation of pub and local newspaper relief.