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 summarises 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.
The Committee decided to take consideration of this report and the following report (Growth and Development Budget Options 2020/21) together. As such, the Committee considered a report of the Deputy Chief Executive and City Treasurer that set out the impact of COVID19 and other pressures and changes on the Council's budget for the period 2021-2025, 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 Growth and Development Directorate had a gross budget of £63m, and a net budget of circa .£9.1m, with 636.5 full time equivalent (fte) posts;
· Overall the Directorate had identified savings totalling circa. £2.314m.This would require a reduction of circa 22fte posts;
· Due to lead in time around required investments and timing on some contracts/leases, the £2.314m would be phased over the period 2021/22- 2024/25, with an initial £2.024m being delivered in 2021/22;
· The options identified that were under the remit of this Committee totalled £0.733m and required a reduction of 11fte posts;
· A breakdown of the savings proposals on a service by service basis;
· If further budgets cuts were required, options for a further £2m with an additional reduction of 30fte posts had been identified for further development.It was recognised that if this were required there would be an unavoidable impact on the service offer to residents, businesses and communities;
· The specific options under the remit of this Committee would deliver circa £1.1m deeper cuts which would require service redesigns across a number of areas in order to support the reduction in 30fte’s; 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 January Scrutiny that incorporated the feedback from this meeting, the budget consultation and the impact of the Finance Settlement.
The Leader made brief comments on the first report which included the difficult position the Council would face in setting a sustainable budget for the next three years without further financial support from government. He also commented on the support needed from government in the short term to manage the loss of commercial income from the Airport.
The Strategic Director (Growth and Development) commented that the Growth and Development Team was central to the economic recovery of the city, and whilst it was acknowledged that savings and efficiencies needed to be made, the proposals put forward would have an impact on the Council’s ability to support the city’s economic recovery and growth.
Some of the key points that arose from the Committee’s discussions were: -
· If the Council needed to make significant budget cuts would it still be able to deliver the outcomes in the Our Manchester Strategy;
· Concern was raised in relation to the potential increase in youth unemployment as a result of the savings that would be required in supporting work and skills for youth unemployment;
· Concern was raised in relation to how the proposed savings would impact on the ability for Building Control and to respond promptly to developments that did not have planning permission;
· Would anything be put in place to support staff who would have to absorb additional work as a result of the proposed cuts in posts;
· Had there been any learning from poor investment decisions in the city’s economy as a result of the pandemic;
· It was an indictment on government that they were failing to see the dire financial situation that Manchester and other Councils were facing as a result of the pandemic having initially promised to support local authorities with whatever funding they needed to tackle the pandemic;
· Had the longer term consequences of potential further cuts been identified and the impact of these measured;
· Concern was expressed about the impact of the cuts on opportunities for women in the economy;
· Clarity was sought as to what would be the consequence if the Council was unable to set a balanced budget; and
· Could examples be given of how the Council could be creative in its future income generation, whilst protecting its budgetary position
The Strategic Director (Growth and Development) the Council was working hard to create opportunities for its most disadvantaged residents and communities but with the loss of resources and income, the Council would not be able to do as much as it would want to. Assurance was given that the Council was working to find partners who shared similar issues to work with, bringing public and private finance together and be creative, working in new and enterprising ways.
In terms of Building Control, the Planning Department worked on a cost neutral basis but it was acknowledged that with less staff in post it could lead to delays in the planning and building control process. It was commented that the Council was looking at how more could be done digitally in the Planning process.
The Director of Inclusive Economy advised that following the end of Future Jobs Fund, the Council had set a small fund going to support a scheme entitled My Future Intermediate Labour Market, which was used to support the most disadvantaged young people, by working with employers to offer apprenticeships and job opportunities. With the introduction of Kickstart, which overlapped with the schemes purpose, it had been proposed to offer this scheme as a saving.
It was reported that the Council had a number of schemes available to support staff around health and wellbeing. It was recognised that Senior Managers would need to take responsibility to ensure that their staff were not overburdened with additional workloads and that the re-prioritisation of work would likely be required.
The Strategic Director (Growth and Development) commented that the long term impact of these cuts could have a detrimental effect on the Council’s ability to deliver its inclusive growth agenda and housing agenda as well as the long term prosperity of the city.
The Leader advised 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 which in effect would result in Government taking control of the Council and setting the Council’s budget, effectively abandoning local political control.
The Strategic Director (Growth and Development) advised that the Council could be creative in future income generation through the cornerstones of the Council’s recovery plan – green growth, digital and health innovation were cited as expamples.
The Committee endorse the recommendation that the Executive consider the officer cuts and savings options, taking into account the feedback from this scrutiny committee as described above.