Report of the Deputy Chief Executive and City Treasurer and City Solicitor

This report updates on the main announcements from the Spending Review 27 October 2021 with a focus on the implications for local government funding, what this means for the Council's budget position and the proposed budget process.

The Committee considered the report of the Deputy Chief Executive and City Treasurer and City Solicitor, that provided an update on the main announcements from the Spending Review 27 October 2021 with a focus on the implications for local government funding, what this meant for the Council's budget position and the proposed budget process.

Key points and themes in the report included:

·                The Council was forecasting an estimated shortfall of £4m in 2022/23, £64m in 2023/24 and £85m by 2024/25;

·                A summary of all Spending Review Announcements;

·                The Corporate Core priorities and budget; and

·                The Commercial & Operations priorities and budget.

Some of the key points that arose from the Committee’s discussions were:

·                That the current Government was committed to cutting public service funding;

·                The failure of Government to invest in initiatives to address climate change;

·                The failure of Government to adequately address the issue of funding Adult Social Care, noting the significant pressure this placed on the Council’s budget;

·                The statement within the report that read ‘the Council has borne the brunt of local government cuts and if it had seen funding cuts in line with an average Council it would have £85m a year more in funding than it currently has.’ should be made explicit to the residents of the city;

·                Further information on the £50.6m of risk-based reserves was requested;

·                How would the reduced airport dividend be accounted for;

·                An explanation was sought in relation to the reported lower number of Council Tax exemptions and the reported fewer than anticipated Council Tax Support claimants;

·                All opportunities to address empty properties using the Council Tax scheme should be utilised;

·                Noting the national investment announcements, how much of this funding would be directed to Manchester;

·                How would the City Region Sustainable Transport award benefit Manchester residents;

·                Would there be any new additional funding released to Local Authorities to support the activities and pressures realised as a result of the pandemic; and

·                What impact did inflation and interest rate increases have on the budget.

The Deputy Leader (Finance) said that it was important to consider the budget in the context of ten years of imposed austerity and continued reductions in public sector spending, in addition to the impact of COVID-19. She stated that the Local Government Finance Settlement was expected mid to late December and the outcome and budget implications would be reported back to the January meeting of this Committee. She concluded by stating that the ongoing piecemeal approach to Local Government Funding was inappropriate and that Manchester would continue to lobby for a fairer, long term arrangement to help support and deliver the strategic ambitions of the Council and improve the outcomes for Manchester residents. 

The Deputy City Treasurer responded to questions by stating that all commercial income had been impacted by COVID-19, adding that the Airport divided was applied retrospectively and this had been used to support a significant amount of work delivered during the pandemic. He described that prudential budgetary assumptions were made, hence the reported £50.6m of risk-based reserves. He further described that the estimated Council Tax surplus of £6.9m was accounted for in part due to the collection rate being better that anticipated. He stated that the reduced number in student exemptions was also due to students not moving into properties during the pandemic and undertaking online tuition. With regard the levels of Council Tax Support he stated that the budget for this had not been reduced, however the demand on the scheme was not as high as anticipated.

The Deputy City Treasurer advised that Transport for Greater Manchester were working on the delivery of schemes to improve connectivity for Manchester residents, noting the City Region Sustainable Transport award. He commented that these plans included decarbonising public transport and the conversations regarding the redevelopment of Piccadilly station and HS2 were ongoing. In response to the specific question regarding additional COVID-19 funding he advised that no additional funding would be made available, adding that any COVID-19 budget related legacies would be identified through the budget setting process.

The Deputy City Treasurer stated that budget planning assumptions and modelling had been calculated to accommodate inflationary pressures and borrowing using higher interest rates. He commented that a rise in inflation rates impacted on vulnerable residents which in turn impacted on the demand of Council services.

Decision

The Committee notes the report.