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

The report of the Deputy Chief Executive and City Treasurer was submitted 2019/20 Annual Accounts, which have been signed by the Deputy Chief Executive and City Treasurer.

The City Treasurer introduced the report and informed the meeting that the accounts were in a relatively strong financial position with a small overspend identified, strong balance sheet and reserves. Following Covid19 and the lockdown, work had been undertaken by staff remotely to produce the accounts and their work in producing the accounts in such challenging circumstances was recognised. The group accounts had been delayed and circulated prior to the meeting.

The Committee received a presentation from the Deputy City Treasurer which provided:

?        An accounts timetable which  included public inspection until 10 September and audited accounts to the  and the completion of the audit of the accounts by the end of November 2020.  

?        A Narrative Report providing details on the performance of the Council’s strategic objectives.

?        Net Revenue Budget 2019/20 – net revenue budget compared to outturn and key reasons for variations        

?        General Fund Revenue Outturn 2019/20

?        Capital Outturn 2019/20 compared to budget, details of spend for key projects and summary of how capital expenditure was funded

?        2019/20 Key Variations on the budget

?        Housing Revenue Account Outturn 2019/20

?        Capital Outturn 2019/20

?        Capital Spend and Financing 2019/20

?        Effects of COVID 19 on 2019/20 Accounts

?        Comprehensive Income and Expenditure Statement

The Chair invited questions from the Committee.

A member referred to the capital outturn and requested that this not be presented in presentations with the revised budget but instead with the original budget report to provide a more accurate picture of how the budget has performed. Officers were asked to explain the Council’s debt position, what plan there is to use the capital reserves, and the position on loans to maturity and the interest paid per year.

The City Treasurer noted the point regarding the capital outturn and revised budget and explained that changes can take place regarding budget allocations. The point was also made that the interest rates on current loans are at a fixed rate. It was reported that the long term debt book relates to loans taken from 1991 onwards, with the majority of the debt being long term, and of this c. 90% is 10 years or more until maturity. Debt of c. £6m will mature by the end of the 2021/22 financial year and the majority of the remaining debt running until 2050 onwards. The rate of interest for individual debts is set at the market rate at the time of the loan and would have been considered the best value for money at that time. 

A member referred to Notional Accounting Adjustments and asked officers to explain what this related to and the re-measurement  of pensions referred to in the accounts . It was reported that Note 12 in the accounts provided an explanation of the adjustments which included such items as depreciation. The re-measurement  of the pension figure is a notional adjustments and is based on actuarial assumptions including projections for life expectancy which for the first time in recent years had reduced.

A member referred to the use of the term ‘vulnerable’ and requested officers  instead refer to ‘vulnerable people’ in future reports. Reference was also made to  the strength of Manchester Communities in helping themselves and those part of the community that experience digital exclusion and the importance of engaging with them.

The Committee was informed that the wording within the accounts would be examined to pick up the point raised regarding the strength of communities in relation to the work ongoing with the Our Manchester approach and digital inclusion. 

A member stated that the Committee was aware and understood the difficulties in producing the annual accounts in view of the COVID 19 impact and the economic challenge to the City and the time that has taken to complete them.

A member referred to the Group Accounts and in particular the Manchester Airport Group (MAG) going concern note  and the waivers in financial covenants.  There was concern re the potential impact of the downturn in travel with different scenarios including a possible second peak. It was reported that MAG and the Council had carried out extensive due diligence and scenario planning and at the time of the meeting current position does not relate to the worst case scenario. As the covenants included a measure of debt to EBITDA it was inevitable the covenant would be breached but a lot of work has been carried out with the bondholders and other debtors.  As with all businesses there remains a financial risk if there is a significant second spike in infections but MAG would not be alone in being severely impacted. 

Decisions

1.    To note the unaudited 2019/20 Annual Account, signed by the Deputy Chief

Executive and City Treasurer, including the narrative report.

2.    To acknowledge the work of staff involved in the production of the Annual Accounts, in particular the circumstances under which they have had to work and that they be thanked on behalf of the Committee.