Challenge looms as 2021/22 budget-setting approaches

The latest on the challenging budget position facing Manchester City Council next year and beyond is set out in a report to the Council’s Executive which meets on 14 October 2020.

The impacts of the Covid-19 period - both through increased costs and lost commercial income - combined with pre-existing underlying budget pressures (associated with population increase, demographic change and inflation) mean the Council is currently facing a predicted shortfall of more than £100m in 2021/22.
While in-year savings and extra resources from Government mean we should just about be able to balance the budget for this year, 2020/21, next year and the following years will be far more difficult.
Firstly, because of the way our budget works many of the impacts of the Covid-19 pandemic - especially those relating to lost commercial income, business rates and Council Tax - will not be felt fully until 2021/22.
Secondly, there is expected to be a significant and ongoing increase in social care costs as a result of the health and economic impacts of the pandemic. No further Government funding relating to Covid-19 is confirmed after this financial year. 
As things stand, without significant Government support, the £100m+ forecast shortfall would equate to around a 20% cut in service budgets.
This comes on top of ten years of austerity which have necessitated that we make £379m worth of cumulative cuts and reduce our workforce by 40%, equivalent to around 4,000 full time staff.
A report setting out the Council’s longer term position and possible savings and other mitigations to address the budget for next year and beyond will be brought to November’s Executive meeting. 
Sir Richard Leese, Leader of Manchester City Council, said: “We have navigated through some tough times in the last decade but next year looks set to be the hardest yet.
“When it comes to developing proposals to tackle this extremely challenging financial situation we will do this carefully, consultatively and with a clear focus on the people’s priorities for the city which were informed by a major consultation exercise. These are protecting the most vulnerable, delivering the best services we can and early help to support people so they can avoid getting into greater difficulties, all underpinned by inclusive and sustainable job creation. But no one should be under any illusions that this can be achieved without some very difficult decisions.
“All of this will require transformational changes to how the council operates and further progress in the drive to sustainably reduce the need for, and the cost of, some of the support services it provides.
“Raiding the reserves is not the answer. While this might get us through 2021/22 they would quickly run out afterwards and this approach is neither sustainable nor responsible as it would leave us unequipped to deal with further unexpected events.
“We won’t know the full extent of the financial challenge we are facing until later this autumn. But all the indications are that local government, despite its central role in tackling the coronavirus crisis and increasing responsibilities, will not be considered a priority.
“It is not reasonable for Government to expect us to rely more and more on Council Tax, Business Rates and commercial income at a time when these resources are dwindling and the costs for the services we deliver for Manchester people are increasing. We need a financial settlement from Government which recognises the crucial role the council plays at the heart of the city.”

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