Agenda item

Agenda item

Council's Medium Term Financial Plan and Strategy for 2021/22

Report of the Deputy Chief Executive and City Treasurer attached

 

This report sets out the impact of COVID-19 and other pressures and changes on the Council's budget for the period 2021-2025.  It will summarise the savings options under consideration from 2021/22 as well as set out the approach to Equality Impact Assessments and consultation as part of the budget setting process.

Minutes:

The Committee decided to take consideration of this report and the following report (Corporate Core Budget Options 2020/21) together.  As such, the Committee considered a report of the Deputy Chief Executive and City Treasurer and City Solicitor that set out the impact of COVID19 and other pressures and changes on the Council's budget for the period 2021/22, including the impact of COVI19 on the capital programme and the implications for the budget and a report that set out the details on the initial savings options proposed by officers to address the estimated initial budget gap of £105m in 2021/22,

 

The main points and themes within the first report included: -

 

·                The Medium-Term Financial Plan remained challenged by uncertainty, which included the outcome of the Spending Review and post 2021/22 the potential changes to how local government funding was distributed;

·                Prior to COVID19 there was an underlying budget gap of c£20m for 2021/22 rising to c£80m by 2024/25;

·                Dealing with the impact of COVID19 had resulted in major spending pressures, particularly in social care, but also across all Directorates;

·                The forecasted budget shortfall relating to COVID19 pressures and the Budget Position 2021/22 to 2024/25;

·                Initial proposals across all Directorates to start addressing the budget gap in advance of the Spending Review and Local Government Financial Settlement;

·                The need to undertake an Equality Impact Assessment on the options put forward, particularly those that involve impacts on services for residents and reductions in the Council’s workforce;

·                Proposed consultation on budget options and timescales; and 

·                Next Steps.

 

The main points and themes in the second report included:

 

·                The Corporate Core Directorate had a net budget of £76.9m, with 1,823fte’s employees;

·                Currently the Corporate Core Directorate had identified officer cut proposals of £7.127m, which broadly equated to a reduction of 130fte’s, against which there were c33 vacancies;

·                A breakdown of the savings proposals on a service by service basis, including officer options for other service areas outside of the Corporate Core which formed part of the remit of the Committee;

·                If further budgets cuts were required, options for an additional £7.3m had been identified, however, this would reduce the Corporate Core headcount by a further 124fte and reduce capacity down to the provision of the bare minimum;

·                In order to achieve the reductions, set out in the report, the council would open a limited voluntary redundancy/voluntary early retirement scheme predominately in those areas in the corporate core which were aiming to achieve staffing reductions;

·                Consultations had started with Trades Unions on the MPeople processes to ensure that the Council did not lose focus on providing support for the workforce to develop and progress and where relevant to reskill into different roles; and

·                The Directorate budget proposals would be subject to further refinement following feedback from Scrutiny Committee and updated prior to being   submitted to Executive.   A further report would be brought back to Scrutiny in January 2021 that incorporated the feedback from this meeting, the budget consultation, the impact of the Finance Settlement and the outcomes of the VER/VS scheme.

 

The Leader made brief comments on the first report which included the additional funding of £24m received from Government to tackle COVID19 which would reduce the use of reserves this year to allow greater use of reserves in next year and future years budgets.  He clarified that this funding did not address the revenue gap and was a one-off payment.  In terms of the Capital Budget there was significant increase in costs around construction schemes related to COVID19 and inflation.  This meant the capital programme would be continually reviewed to ensure it related to the priorities set out within the budget.  He added that there was a need to be mindful of false economies by delaying schemes to future years which could result in a risk of costs increasing.

 

The Deputy Chief Executive and City Treasurer commented that the ongoing impact of COVID19 was resulting in a significant gap in the Councils budget position for 2021/22 which was expected to worsen in 2022/23 and whilst it was hoped that over time, the impact of COViD19 would reduce, this would be when the underlying budget pressures would take effect. Because of this, there was a need to start work now on how this budget gap could be reduced, in advance of the Government’s Spending Review, which was anticipated to be announced on 25 November 2020.  She emphasised that whilst all efforts would be made to minimise the impact on other Council services and residents, it was likely that there was going to be a need for substantial budget reductions across the council regardless of what funding would be provided through the Spending Review.

 

What followed was a lengthy and thorough discussion on the proposed budget options.  Some of the key points that arose from the Committees discussion were:

 

·                Grave concern was expressed about the continued need for the Council to reduce its budgets year on year due to the withdrawal of financial support from government, including cuts to budgets that provided services to the most vulnerable residents of the city;

·                It was felt that the Council was unable to plan its budgets effectively with one-year settlements from Government and it was hoped that Government would provide a sustainable long-term solution to enable the Council to make longer term budget plans;

·                Concern was expressed regarding the proposed reduction in funding provided to the Discretionary Housing Payment Scheme and would drive increased cost in other areas, and a question was asked as to whether analysis had been done to calculate what proportion of those who were supported through DHP would become homeless if this was cut, and at what on-costs to the system, including through potential increased Children’s Services involvement;

·                It was suggested the budget reduction proposals to the DHP were not put forward to the Executive for consideration before greater analysis of the impact of this reduction might have on some of the city’s most vulnerable residents and associated impact on other services budgets;

·                There was concern in relation to digital exclusion for some of the most deprived residents and communities in the City as the Council moved to more digital interactions with its residents;

·                It was queried whether proposals to reduce jobs in service areas that provided essential services to the city’s most vulnerable residents was the correct approach;

·                It was asked that the Chancellor of the Exchequer provided the Council with the funding it required in order not to make staff redundant and continue to provide the services needed for the City’s most vulnerable residents and communities;

·                Assurance was sought that the number of proposed redundancies across the Directorate had been mapped against the areas that would be targeted through the proposed Early Retirement/Voluntary Redundancy scheme to ensure the right areas were being targeted;

·                Why was the Council’s Communications Department only proposing a reduction of three posts when other service areas with a similar level of staff were being required to offer up more staffing reductions;

·                There was concern about the proposed loss of posts across Audit and Policy Performance and Reform;

·                What would happen if the Council was unable to set a balanced budget;

·                Could Officers work on proposals to move traders on Wythenshawe indoor Market to the outdoor market;

·                Could any assurance be given that Manchester Fayre would continue to be funded to provide school meals to Manchester Schools;

·                Clarification was sought on what would be the level of Council Tax increase needed to bridge the finding gap;

·                Further information was sought on the sale and lease back proposals;

·                Did the proposals to end the joint venture with NCP relate to all NCP car parks;

·                It was suggested that the projected savings from the return of NCP car parks to the Council was overestimated as it was based on those car parks returning to a level of pre-COVID use;

·                It was suggested that the wording used in relation to the income generation targets made in bereavement services be revisited and rephrased more appropriately;

·                Would Equality Impact Assessments be undertaken on the proposed budget savings; and

·                What impact would the proposed savings have on Manchester’s Voluntary and Community Sector.

 

The Director of Customer Services and Transactions advised that in relation to the DHP, the Council received £2.538m government funding.  The extra £2m that the Council had put into this scheme had been due to the impact of Universal Credit and Homelessness.  There had been some changes that had reduced the amount of DHP spend in the last few years, including changes in the Local Housing Allowance rates and changes to the cost of placing homeless families in dispersed accommodation.  She added that up to the present day, the Council, had spent £1.6m of the DHP budget and had committed a further £682,000, totalling £2.285 and it was anticipated that even taking into account the impact of COVID19, of the additional £2 million that the Council had allocated to this scheme, it would only need to spend £800,000.  Consequently, it was felt that the Council could meet demand from the funding received from Government alone, but she said that if the amount reduced that some people would have to be denied support who would currently receive it. It was also clarified that the Council was not proposing to close its front line service offer as it moved to more digital interactions and there would still be the opportunity for residents to speak to staff in person and the Director of Customer Services and Transactions highlighted the smarter ways of working that were being offered to residents to enable them to interact with the Council in a more effective way that suited them.

 

The Deputy Chief Executive and City Treasurer advised that the potential impact of total job losses in the Directorate was 130 ftes, with the first phase of officer options offering a reduction of 130ftes of which 33 were vacant posts.  An Early Retirement/Voluntary Redundancy scheme would be made available which would be targeted where the reductions needed to be made but would not be closed off to the rest of the Council in order to create some capacity for movement.  It was hoped that there would not result in the need for compulsory redundancies. 

 

The Director of PPR advised that the proposed reductions in PPR were put forward as a fair and proportionate contribution to the savings needed and whilst difficult, would be manageable to maintain capacity within the service.

 

The City Solicitor advised that in relation to the Communications Department proposals it was hoped that through VER/VS there would be an opportunity to restructure the service to deliver further saving efficiencies.

 

It was explained that the Council had a legal responsibility to set a balance budget and if it was unable to do so then this would result in the need to declare a Section114 notice.  This would require an emergency budget and effectively end local political control. 

 

The Director of Commercial and Operations (Neighbourhoods) confirmed that the Council was working with St Modwins to identify options to extend the outdoor market at Wythenshawe.  If possible, this would require capital cost which would need to be analysed to see if they generated value for money, but it was noted that not all traders would be able to operate on an outdoor market.  In relation to Manchester Fayre, whilst acknowledging the service the organisation had provided during pandemic, he advised that this was not a statutory council service and the amount of subsidy required going forward was in excess of £600,000 per year.  The Council currently lost a school, every eight weeks, who sought an alternative provider which was impacting on the economies of scale of the service and it was no longer possible to provide the service on a cost-effective basis.

 

The Leader advised that in order to bridge the funding gap through increased contributions via Council Tax, this would require approximately a 70% increase in Council Tax across all bandings and could not be an option as this would place too large a burden on Manchester residents.

 

The Director of Commercial and Operations (Neighbourhoods) advised that only the NCP carparks that the Council owned would revert to the Council which equated to 13 sites.  He acknowledged the point made in relation to the wording around bereavement services.

 

The Strategy Director (Growth and Development) gave a brief overview of the possible intentions of the sale and lease back proposals as part of a wider corporate estate review.

 

The Director of PPR clarified that those budget saving options that required an Equality Impact Assessment would have one as part of the final budget saving proposals as well as the impact of these options on other areas.  He added that cuts to the Our Manchester VCS funding were not included in the initial tranche of Officer options, but it was anticipated that there would be some reductions in VCSE funding as part of the further set of options.  A piece of work had commenced to map the current VCSE funding across the Council and key partners in order to better understand the impact of any proposed cuts.

 

The City Treasurer confirmed that in addition to individual EIA’s, there would be a piece of cross-budget analysis done to look at the overall equality impact of the budget decisions.

 

Decision

 

The Committee:

 

(1)       Requests that the budget savings proposals in relation to the Discretionary Housing Payment Scheme and Customer Services are not put forward to the Executive until the Committee receives further reports at its next meeting in December, which provide an analysis of the impact these proposals will have on the City’s most vulnerable residents and other associated Council Services.

(2)       Requests that the Executive take on board all the comments made by the Committee.

(3)       Requests that as part of the discussions with Government, Officers urge the Chancellor of the Exchequer to provide the Council with the funding it requires in order for it to not have to make staff redundant and to be able to continue to provide the services needed for the City’s most vulnerable residents and communities.

(4)       Requests for further information on the sale and leaseback proposals contained within the report be provided to Committee Members.

Supporting documents: