Agenda item

Agenda item

Revenue Budget Monitoring 2020/21 and Budget Position 2021/22.

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

Minutes:

The Deputy Chief Executive and City Treasurer presented a review of the 2020/21 revenue budgets. The report provided an overview of the Council’s financial position as at the end of August 2020 and the work to develop a balanced budget for 2020/21. The report identified a projected deficit for 2020/21 of £271k, a significant improvement on the forecast deficit reported in July of £5.476m (Minute Exe/20/81). That new forecast was based on the financial implications of COVID-19, government funding confirmed to date, other identified budget changes, and in-year efficiencies and mitigations. The anticipated financial cost of the COVID-19 pandemic to the Council so far was £55.583m in 2020/21, increasing by a further £160.675m in 2021/22.  The overall revenue forecast for 2020/21 was:

 

Forecast as at 31 August 2020

Original Approved Budget £000

Revised Budget £000

Forecast Outturn £000

Total Forecast Variance £000

Movement from last report £000

Total Available Resources

(666,125)

(827,470)

(812,604)

14,866

33

Total Corporate Budgets

126,761

264,202

262,634

(1,568)

(1,192)

Children's Services

130,320

130,540

131,198

658

(6,021)

Adult Social Care

221,253

232,291

239,165

6,874

(1,491)

Homelessness

15,285

17,292

22,120

4,828

(2,316)

Corporate Core

69,958

77,598

78,893

1,295

(2,414)

Neighbourhoods

93,802

94,841

103,282

8,441

2,497

Growth and Development

8,746

10,706

16,035

5,329

(2,264)

Total Directorate Budgets

539,364

563,268

590,693

27,425

(12,009)

Total Use of Resources

666,125

827,470

853,327

25,857

(13,201)

Total forecast over / (under) spend

0

0

40,723

40,723

(13,168)

COVID 19 Government grant income (tranche 1, 2 and 3) - Confirmed

 

 

 

(40,452)

0

Proposed Corporate mitigations

 

 

 

0

7,963

Net forecast over / (under) spend

 

 

 

271

(5,205)

 

The report examined the impact the COVID-19 pandemic was expected to have on the council’s finances in 2021/22 and beyond. The report included a reminder that the Council had, back in February and early March 2020, forecast a £20m budget deficit which would have had to be addressed as part of the 2021/22 budget setting process.  With the impact of the pandemic, the added costs and the loss of income,  the forecast deficit had increased to £136m before possible mitigations, and £105.448m after mitigations. The forecast position for the coming years was:

 

 

Revised

2020/21 £000

2021/22 £000

2022/23 £000

2023/24 £000

2024/25 £000

Budget shortfall after confirmed funding/ mitigations

271

135,958

146,801

110,143

123,391

Sales, fees and charges support (estimate)

(6,400)

0

0

0

0

Smooth Collection Fund over 3 years:

0

(24,381)

12,190

12,190

0

Defer planned use of reserves to balance the budget

6,129

(6,129)

 

 

 

Total - Potential Budget Gap

0

105,448

158,991

122,333

123,391

 

Unless further government support was forthcoming that scale of reduction in 2021/22 would require cuts of about 20% of the budgets for the delivery of services. Those cuts would be on top of cumulative budget cuts of £379m and workforce reductions of around 40% since 2010. The ways the potential deficit could be addressed were to be considered in November, by the Scrutiny Committees and then by the Executive.

 

The report also addressed a number of specific changes and approvals needed as part of the Council’s budget revisions processes in 2020/21.

 

Budget to be Allocated

 

When setting the 2020/21 budget the Council has agreed to hold some funds for contingencies, and other money that was to be allocated throughout the year. The report proposed the use of some of these budgets to be allocated. These were agreed:

·         £5,252,000 in 2020/21 for the annual pay increase award for employees

·         £57,000 for external fostering placements as the North West framework for external fostering had been updated with an average price increase of 1.5%

·         £61,000 for inflation in the Council’s own costs for business rates

·         £600,000 additional budget provision to meet the requirements of a security contract

·         £100,000 for a trauma informed response to domestic violence to provide an opportunity to resolve issues, preventing the escalation of risk and demand on services

 

Grants in Addition to that Already Planned

 

The report explained that notifications had been received in relation to specific external grants. These allocations had not confirmed at the time of the 2020/21 budget setting processes, confirmation of them was now being sought. Five of the eight grants were additional funds for the Council’s response to the COVID-19 pandemic. These were all supported:

·         £230,000 in 2020/21 and £395,000 in 2021/22 for “Build-A-Business” in libraries to help improve support for start-up and newly formed businesses across Greater Manchester.

·         £224,000 in 2020/21 and £224,000 in 2021/22 from a National Network Funding award also to improve support for start-up and newly formed businesses currently supported by the Business & IP Centre in Central Library.

·         £65,000 in 2020/21 for a wellbeing for education return grant to provide training and support on specific mental health issues.

 

The grants awarded in relation to the pandemic were:

·         £2m in 2020/21 for the Next Steps Accommodation Programme, being £1.6m for government additional funding for rough sleepers as part of the “Everyone In” programme; £100,000 for cold weather provision for those sleeping rough when the temperature drops below zero; and £300,000 for incentives to landlords to secure properties in the private rented sector specifically for people who were rough sleepers and have been provided with accommodation during the COVID pandemic.

·         £1.862m in 2020/21 and £2.975 in 2021/22 from the Test and Trace Support Grant, total government support being £4.837m to support Manchester City Council’s Test and Trace programme.

·         £3.084m in 2020/21 from Infection Control Round 2 funding, to be provided to care homes within Manchester on a 'per beds' basis and to CQC-regulated community care providers on a 'per user' basis, including to social care providers with whom the Council has no existing contracts. The Council had discretion over the remaining 20% (£0.617m) to provide support to other care settings and wider workforce measures in relation to COVID-19 infection control.

·         £0.68m in 2020/21 for the Test and Trace Support Payments (Self Isolation Scheme) to assist individuals who have been formally notified to self-isolate.

·         £0.453m in 2020/21 from the Local Authority Compliance and Enforcement Grant to support additional compliance and enforcement activities in the city.

 

Budget Virements

 

The report proposed three funding virements. All those were supported and agreed, with the largest virement to be recommended to the Council for final approval:

·         From corporately held budgets to be allocated to Facilities Management: £600,000 in each of 2020/21 and 2021/22 for an increase on security contract costs so as to maintain Manchester Living Wage for the staff.

·         From all directorates to corporately held budgets to be allocated: £204,000 in 2020/21 and 451,000 in 2021/22 from savings on the Council’s energy bills, with savings of 8% on electricity and 7% on gas having been secured.

·         To be recommended to the Council - from third party payments to transfer to reserves: £7,627,000 in 2020/21 from retaining 50% of the anticipated growth from participation in the 100% business rates pilot scheme, instead of transferring that money to the GMCA, as had been the intention when the budget had been set. This was to help increase reserves that would be available to mitigate the business rates deficit in 2021/22.

 

Decisions

 

1.         To recommend to the Council the approval of the proposed budget transfer of £7.627m from ‘third party payments’ to ‘transfer to reserves’ in order to support the 2021/22 budget.

 

2.         To note the global revenue monitoring report and a forecast outturn position of a £271k deficit, which it is anticipated will be balanced by government funding, with any surplus supporting the 2021/22 position.

 

3.         To approve the use of budgets to be allocated, including the 2020/21 pay award, as set out above.

 

4.         To approve the use of grants in addition to that already planned, as set out above.

 

5.         To approve the proposed virements as set out above.

 

6.         To approve additional COVID-19 grants in Homelessness of £2.000m, made up of £1.600m for the Next Steps Accommodation Programme grant, £100k for cold weather provision, and £300k for incentives to landlords to secure properties in the private rented sector.

 

7.         To approve additional COVID-19 grants in Adult Social Care of £3.084m for Infection Control round 2.

 

8.         To approve additional COVID-19 grant in Neighbourhood Services of £453k for Compliance and Enforcement.

 

9.         To note the application of £0.680m for Test and Trace Support Payments to assist individuals self-isolating following the confirmation of the Government's Self Isolation Scheme.

 

 

Supporting documents: