Report of the Deputy City Treasurer attached

This report updates Members on the main announcements from the provisional local government finance settlement 2022/23 announced 16 December 2021, with a focus on the impact on Manchester City Council and its budget for 2022/23. It also outlines the main budget assumptions behind the Medium-Term budget position 2022/23 to 2024/25.

The Committee considered the report of the Deputy Chief Executive and City Treasurer that provided an update on the main announcements from the provisional local government finance settlement 2022/23 announced 16 December 2021, with a focus on the impact on Manchester City Council and its budget for 2022/23. It also outlines the main budget assumptions behind the Medium-Term budget position 2022/23 to 2024/25.

Key points and themes in the report included:

·         Describing the key elements of the Provisional Finance Settlement and confirmed that the c£7.7m savings and mitigations, as reported to Resources and Governance Committee on 9 November, were sufficient to deliver a balanced budget next year;

·         The implications for the Manchester Local Care Organisation budget;

·         Describing the implications for the Council’s budget, including the Strategy to close the remaining budget gap; and

·         Conclusions and next steps, noting that Officers had estimated the future resources available based on the information available with the resulting forecast gap of £37m in 2023/24 increasing to £58m in 2024/25;

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

·         The fair funding proposals did not reflect a fair approach to funding for local government;

·         The Council’s budget position was not one of choice and was something that government had enforced on Manchester through ten years of austerity measures and the people of Manchester deserved better;

·         How confident were officers with the integrity of the projected levels of savings that the Council would need to make for 2023/24and 2024/25;

·         In considering the variations amongst Local Authorities in the effective operation of care markets in their areas, how well placed was Manchester in relation to the payment to residential and domiciliary care providers for carrying out the range of activities at appropriate rates and had consideration been given to working with other local Authorities to address this;

·         How were the NHS reforms going to be integrated with the Manchester Local Care Organisation (MLCO) and what would be the potential impact of these reforms on the Council’s Adult Social Care provision;

·         How had the budget mitigation of £2.5m for Adults Homeless demand management been determined;

·         Assurance was sought if as part of the savings £2m associated with staff budgeting and vacancy factors would not be as a result of a reduction in the staff;

·         What was the underlying figure of actual use of ‘classic’ reserves, setting aside the additional funding that had been provided to tackle covid, which was inflating the appearance of both the reserves and use of reserves figures; and

·         Had previous funding to tackle domestic violence and abuse now been incorporated into mainstream funding.

The Deputy City Treasurer advised that a multi-year model was used to determine the level of savings required.  This was refreshed during the course of the year as more information became available and the level of savings proposed for 2023/24 and 2024/25 were best estimates at present.  The Deputy Chief Executive and City Treasurer added that as well as the Council’s own internal assumptions on demand and the delivery of savings, a number of projections in regards to income needed to be made and the level of future government funding.  Given it was only a one year settlement, the future of Business Rates retention and the potential impact of the Fairer Funding Review, it was very difficult to do this with great accuracy.

The Deputy City Treasurer explained that there was a national issue around appropriate payment in the care market.  For Manchester, those who required some form of residential and or domiciliary care tended to be fully funded by the Council and closer to the true cost of running a care home and the issue raised by care providers around appropriate levels of funding tended to be in areas where there was a higher percentage of self-funding residents requiring care.  The Council was undertaking market sustainability work and £1.8m had been made available from the Social Care levy to help support the sustainability and work with providers.  The Deputy Chief Executive and City Treasurer commented that the Council was also committed to being a Real Living Wage employer and had signed up to the Unison Ethical Care Charter with additional investment to ensure all home care providers were paid at the real living wage as a minimum.  In terms of working with other Local Authorities there was an active group of Greater Manchester Social Care Directors who collaborated on this type of work.

The Deputy Treasurer advised that the NHS was still awaiting their settlement figure from Government and the commencement of the new Integrated Care Organisations would now be delayed until July 2022.  This, along with the impact of tackling Covid meant it had been difficult to undertake any long-term planning.  He added that that both the Council’s and the NHS budgets’ were aligned, and the Council and MLCO were working through the ‘Better Outcomes, Better Lives’ workstream to put plans in place to best use available funding streams.

The Deputy Chief Executive and City Treasurer advised that the savings in Homelessness and Adult Social Care were not savings and resulted from an over estimate of the impact of covid on the the demand for delivering services in 2021/22 and as a result the funding amount had been corrected. 

It was explained that the savings projected in relation tostaff budgeting and vacancy factors had been determined using two factors.  The first being that Council budgeted at top of grade for all staff and as in previous years, the Council often underspent on staffing cost as not all staff were at the top of their grade. Secondly there was often a time lag between someone leaving their post and being able to recruit to the vacancy that occurs, so rather than having to take difficult decisions around budget cuts in other service areas, aligning staffing budgets would be more appropriate.

The Leader commented that the budget papers that would be presented to Scrutiny in February would provide greater clarity around the details of the proposed savings. 

The Deputy City Treasurer advised the use of £184m Reserves was as a result of receiving Business Rates funding a year in advance as opposed to a year in arrears.  This equated to approximately £145m of the £184m.  The other use of Reserves was planned commitment from previous years.  The Council did have a Reserves strategy to support the budget over the medium term which would be included in next month’s suite of budget reports. 

Decision

The Committee note the report.