Report of Deputy Chief Executive and City Treasurer and City Solicitor

Following the Spending Review announcements and provisional local government finance settlement 2022/23 the Council is forecasting a balanced budget for 2022/23, a gap of £37m in 2023/24 and £58m by 2024/25. This report sets out the high-level position.

Further to minute (RGSC/21/46), the Committee considered a report of the Deputy Chief Executive and City Treasurer and City Solicitor, which provided a further update on the saving proposals being proposed as part of the 2022/23 budget process.

Key areas to note were:-

·                Following the Spending Review announcements and provisional local government finance settlement 2022/23 the Council was forecasting a balanced budget for 2022/23, a gap of £37m in 2023/24 and £58m by 2024/25;

·                Overall, the settlement announcements was towards the positive end of expectations and it was expected that mitigations in the region of £7.7m, as previously identified, would be sufficient to balance the 2022/23 budget;

·                The budget assumptions that underpinned 2022/23 to 2024/25 included the commitments made as part of the 2021/22 budget process to fund ongoing demand pressures as well as provision to meet other known pressures such as inflation and any pay awards (estimated at 3% from 2022/23);

·                Whilst this contributed to the scale of the budget gap it was important that a realistic budget was budget set which reflected ongoing cost and demand pressures;

·                The focus would now be on identifying savings and mitigations to keep the Council on a sustainable financial footing; and

·                It was proposed that budget cuts and savings of £60m over three years would be developed for Member consideration which equated to just under 12% of 2022/23 directorate budgets. In addition, £30m of risk-based reserves had been identified as available to manage risk and timing differences.

The Leader advised that whilst there was no major changes to the proposed budget following the report in November, a decade of austerity had resulted in £420 million having been removed from eth Council’s budget, resulting in a  15% reduction in spending power compared to a national average of 2.4% and if Manchester had had the national average applied to its budget, it would have a further £85 million in its budget today.

Some of the key points that arose from the Committees discussions were:-

·                The Council found itself in a situation of uncertainty with just having a one year settlement, forcing it to make preparations for massive reductions in budgets which could have been avoided if the Council had received a longer Finance Settlement;

·                The Committee applauded the commitment by the Council to continue to provide Free School Meals during school holidays to those who were entitled to free school meals attending schools and early year settings;

·                It would be useful to receive more stringent proposals regarding the capital investment to support carbon reduction measures on the Council’s corporate estate at a future meeting;

·                What progress had been made on the potential naming rights for The Factory and what guarantee was there that the loan to The Factory Trust, provided by way of grant, underwritten by the Council’s MIF reserve would be repaid;

·                Assurance was sought that in identifying a suitable naming rights partner, the Council would ensure its reputation would not be adversely impacted;

·                More information was requested on the HR/OD service redesign saving proposals;

·                Had there been any indication whether there would be any associated administration costs to help support the Government’s announcement that people would get a £150 council tax rebate in April to help with the cost of energy;

·                Was there any indication yet on what the pay award for staff will be yet;

·                With the increase in energy and food costs, was the Council expecting an increase in the number of residents that struggled to pay their Council Tax; and

·                Were the proposed savings associated with operational property as a result of the Council exiting leases of office space or the sale of council owned buildings.

The Deputy Chief Executive and City Treasurer advised that there was a report being considered by the Environment and Climate Change Scrutiny Committee that set out the details of the investments made to date into the Council’s climate change agenda which supported the Action Plan and proposals for additional investment in the next financial year.

The Deputy Chief Executive and City Treasurer advised that work was underway in terms of fundraising for The Factory. The partner to assist in finding a suitable naming rights partner had been procured and was working closely with the Council and commercial discussions were underway.  The proposal of the loan was to underwrite any cashflow issues from the reserves that was funding the future grant for MIF, which was a deliberate decision to avoid a cost to the Council. The Deputy Chief Executive and City Treasurer assured the Committee that comments made by this committee previously in relation to the naming rights had been taken on board and there was a strong ethical policy that sat alongside the agreements.  The Leader emphasised this point, advising that she chaired The factory Board, which received regular updates in terms of how money was being spent as well as the progress being made around the naming rights/

In relation to the proposed HR/OD service redesign saving proposals, it was explained that in terms of the Corporate Core, there were two sets of savings, one being the adjustment to the vacancy factor and the other being through staffing changes as part of a service redesign which would be completed in quarter 4 of 2021/22.

The Deputy Chief Executive and City Treasurer advised that negotiations on the staff pay award were still taking place and a decision in the percentage increase had not concluded.  In terms of the £150 council tax rebate, it was confirmed that there would be new burdens funding, but the allocation had not yet been determined.

The Deputy Chief Executive and City Treasurer explained that it was difficult to determine what the impact of rising energy and food costs would be at this stage.  Those on lower incomes did receive financial Council Tax support and the service also provided additional support around helping those getting into financial difficulty.  In relation to the proposed savings associated with operational property, the Council was exiting two office buildings within the city centre.

Decisions

The Committee:-

(1)      Endorse the budget proposals.

(2)      Endorse the recommendations that the Executive:-

·                Note the development of the funding agreement set out in Appendix 1.

·                Support the initial underwriting of the Factory Trust fundraising costs by way of a grant agreement, to be met from the Council’s existing MIF reserve and reimbursed when fund raising is received, and delegate to the Deputy Chief Executive and City Treasurer and City Solicitor to finalise the grant agreement, including any conditions for drawdown and repayment.

·                Approve lease arrangements with delegation to finalise the details to Deputy Chief Executive and City Treasurer and City Solicitor.

·                Continue the support to families to provide free school meals for the 2022 Easter Holiday at £15 per pupil per week. Vouchers will be distributed to households on a pupil basis via schools. This will be funded in line with the arrangements set out in Appendix 1 of this report.

·                Note the Chancellors announcement on the proposal for a £150 council tax rebate for all band A-D properties.

·                Delegate to the Deputy Chief Executive and City Treasurer in conjunction with the Leader of the Council the finalising the detail of the administration of the council tax ‘rebate’ £150 payment.

·                Delegate to the Deputy Chief Executive and City Treasurer in conjunction with the Leader of the Council responsibility for designing and implement the discretionary support scheme. The scheme will be reported back to March Executive.