Budget and Global Monitoring and the Council's proposed recovery plan
- Meeting of Resources and Governance Scrutiny Committee, Thursday, 11th October, 2018 2.00 pm (Item 54.)
Report of the City Treasurer
This report contains a summary of the Council’s revenue budget and forecast outturn position for 2018/19. This is based on an assessment of income and expenditure to the end of August 2018 and financial profiling to 31 March 2019. It also contains details of the recovery plans which have been drawn up to offset the overspend previously reported and to work towards a sustainable position from 2019/20.
The Committee considered a report of the City Treasurer, which provided a summary of the Council’s revenue budget and forecast outturn position for 2018/19. This was based on an assessment of income and expenditure to the end of August 2018 and financial profiling to 31 March 2019. The report also contained details of the recovery plans which have been drawn up to offset the overspend previously reported and to work towards a sustainable position from 2019/20.
Officers referred to the main points and themes within the report which included:-
? A summary of the Council overall budget position for 2018/19 ;
? The progress that had been with saving achievements;
? Details of budget recovery plans which had been drawn up to offset the overspend previously reported and to work towards a sustainable position from 2019/20;
? An evaluation of Invest to Save Initiatives;
? Details of budget virements, budgets to be allocated and use of reserves;
? Prudential Indicator figures;
? Future budget considerations for 2019/20 and a five year forward view beyond the current Government settlement period; and
? The proposed budget setting process and timeline for 2019/20.
The report was to be considered by the Executive at its meeting on 17 October 2018.
Some of the key points that arose from the Committees discussions were:-
· Had the Council or the Executive Member for Finance and Human Resources contributed to the LGA Autumn Statement submission as it had been estimated that further £1.3billion cuts were to be made from to the 2019/20 grant;
· Was it envisaged that the Council would be looking to set another long term budget strategy, taking into account Business Rates retention and the outcome of Brexit;
· Was the Council considering lobbying government for a local taxation reform in relation to Council Tax bandings;
· How could Non-Executive Members be made aware, or involved in, the conversations that were taking place at national level in regards to local government funding;
· There was a need to be mindful in the use of the term ‘savings’ when referring to Mental Health overspend and in particular early intervention;
· How many agency staff were employed in the care sector and had consideration been given to the potential impact of Brexit of those employed in this sector;
· How much was spent on bed and breakfast provision outside of Manchester and did this include transport;
· Given the dependence of Business Rate growth retention on future Council budgets and the proposal to reduce this retention to 75%, had there been any impact assessment of this proposal;
· Was there any further information available in relation to the purchasing of temporary accommodation for housing Manchester’s homeless;
· Why was there an underspend in the Council’s Corporate Core Directorate;
· Why had there been an overspend in the Coroner’s Service;
· Why was there still a high level of unfilled vacancies across a number of departments;
· Was all the identified funding for demographic growth required as only a third had been released;
· A better explanation was requested as to why some of the identified savings within Adult Services had not yet been delivered and consideration needed to be given to invest to save opportunities within the service in order to deliver the required savings in a more timely manner;
· Would the proposed virements as detailed in the report have any impact on delivering statutory services next year; and
· Clarification was sought on the prudential borrowing indicators and why the Airport Strategic Investment, which was included in the budget over two financial years, had been incurred this year, resulting in a breach over the set target.
The Executive Member for Finance and Human Resources advised that the LGA Autumn Statement submission was formed following consultation with all local authorities which had received a high level of responses, including a response from Manchester City Council’s. He commented that in relation to local taxation reforms and specifically Council Tax banding, no Government had attempted to address this, and suggested that caution was needed in looking at Council Tax bandings as any change could result in making some of the poorest Manchester residents poorer. The Deputy City Treasurer added that the Council did not know yet what its financial settlement would be past 2019/20 so it was not possible at the current moment to determine whether another long term budget strategy would or could be set. In terms of involvement of non-Executive Members in, the City Treasure agreed to pick this up with the Chair of the Committee and the Executive Member for Finance and Human Resources officer as to how best this could be enacted upon.
The City Treasurer acknowledged that there were some risks around the use of agency staff and the impact of Brexit, and the Council was looking at the potential impact of this and how services were commissioned. In terms of Business Rates retention the City Treasure explained that the Council had undertaken modelling scenarios of both 100% retention and 75% retention so this could be taken into account when planning beyond 2019/20. The Deputy City Treasurer advised that it was temporary dispersed accommodation that was used more outside of Manchester rather than bed and breakfast. The latest figures the Council had in relation to this was 1364 families and single people in temporary accommodation, with 1009 located within Manchester and the remaining 355 outside of Manchester.
The Head of Finance (Adult Services, Children’s Services and Homelessness) advised that the Council was looking to purchase 60 properties to help address the levels of homeless families, but it was acknowledged that this would not solve the whole problem based on the high number of individuals and families presenting as homeless. The Deputy City Treasurer advised that the Council was working with the Combined Authority in regards to the total cost of enacting the Greater Manchester Mayor’s pledge to tackle rough sleeping, and it was acknowledged that Manchester would have the most significant element across Greater Manchester. The Committee was advised that the Coroner’s Service overspend was in relation an increase in the number of complex cases, which required expert witnesses. The City Solicitor added that none of the extra expenditure had been in relation to the Arena bombing but did advise that the Council would need to pay these costs which would then be claimed back from the Ministry of Justice. The City Treasurer confirmed that the relocation of the Coroner’s Service was fully funded within the Town Hall decant budget. The Executive Member for Finance and Human Resources advised that there was no freeze on filling vacancies, but there was a review taking place on long term vacancies and whether they were still required. It was explained that the underspend in Corporate Core was in the main as a result from a number of one off initiatives, including a reduction in bad debt provision within Revenue and Benefits and a release of a disaster recovery provision. The remaining underspend was due to staffing and general underspends across the service.
The City Treasure confirmed that all the funding for demographic growth had been projected as needed by the end of the financial year. It was explained that the Council held this funding corporately and then released based on business cases that demonstrated the demand was needed.
The Deputy City Treasurer commented that the Council had undertaken a number of Invest to Save opportunities within Adult Services and Health in order to reduce the demand on services. This had been done through the Greater Manchester Transformation Fund. It was acknowledged that there had been some delays in delivering some of these initiatives and reasons as to why this was had been the case were provided.
The Executive Member for Finance and Human Resources reported that the proposed virements would not have any impact on delivering statutory services next year. The City Treasurer advised that a report was submitted to full Council in December 2017 which detailed proposed an additional share holder loan to support the airport expansion, which would result in a significant rate of return. The payment of these loans was to be split across two financial years, but a decision had been taken to make this payment in this financial year, resulting in the adjustment to the prudential indicator.
(1) Notes the report; and
(2) Endorses the following recommendations to the Executive:-
· To approve the proposed virements in paragraph 7.
· To approve the use of budgets to be allocated and contingency in paragraph 8.
· To approve the use of reserves as set out in paragraph 9.
· Recommend to Council that the revised Prudential Indicator for non HRA Capital Expenditure (2) as set out in paragraph 10 is approved.
· That Council is requested to approve the revised Prudential Indicator for non HRA Capital Expenditure (2) as set out in paragraph 10.
- Global Monitoring and Budget update, item 54. PDF 526 KB
- Global Monitoring and Budget update - App 1 Budget Recovery Actions and Implications, item 54. PDF 329 KB
- Global Monitoring and Budget update - App 2 Prudential Indicators, item 54. PDF 205 KB