The challenging financial position facing the Council and proposed savings to close the budget gap are outlined in a series of reports to council committees this month (November 2022.)
The predicted position
In common with local authorities across the country, Manchester City Council is facing a shortfall between the amount of money required to run services and the amount of money available. This is forecast at £28m in 2023/24 rising to £96m by 2025/26.
Huge inflation pressures have meant rising costs across the board – leaving the Council’s expected inflation and utilities costs over the next two years alone £42 million higher than reasonably anticipated.
The Council’s commercial income has also been badly hit by the lingering impacts of the Covid pandemic.
Despite lobbying, we are not expecting any more funding from the government to help with these unprecedented impacts and the wider economic backdrop remains volatile.
This comes on top of more than a decade of cuts in our central government funding, in which Manchester has been one of the hardest hit places in the country.
If this funding had not been slashed and had instead increased in line with budget pressures, we would have £428m a year more to spend on services for the city. Even if Manchester had received only the average cut to council funding between 2010/11 and 2022/23, we would still have £77m a year more to spend on services.
The forecast budget position is based on a proposed Council Tax increase of 1.99% to invest in services to support residents through the cost of living crisis and deliver on residents' priorities and 1% precept to support adult social care. This is still considerably below inflation and would be a much lower increase than for other household bills.
The Council is concerned about the cost of living crisis affecting residents, which is why it has unveiled a £8m support package for residents this year and plans to invest an extra £3.5m in targeted anti-poverty measures in next year’s budget. However, the desire to minimise Council Tax increases has to be balanced against the need to fund essential services which support Manchester people, especially those who are struggling the most.
In short, the less Council Tax goes up, the more cuts will have to be found on top of the savings already being put forward. Manchester people on the lowest incomes get help through our Council Tax Support scheme.
Making the most of what we’ve got
For all these challenges, the Council has been continuing to deliver on what residents told us were their priorities. This includes overseeing the creation of 1,000 affordable homes a year and tackling homelessness, promoting a healthier and happier city, tackling inequalities and creating vibrant neighbourhoods where people want to live – all while leading the drive towards becoming a net zero carbon city by 2038 or earlier.
The Council is also focused on getting the basics right – from emptying bins to maintaining parks, libraries, leisure facilities and roads while improving options for walking and cycling.
Sound financial management has left the Council in better shape than many other local authorities and meant that the scale of savings being proposed over the next three years – relative to the size of the Council’s revenue budget (c.£690m a year) - is not as large as elsewhere.
It is planned to use around £16m a year of the Council’s reserves – which cannot be used simply to plug the funding gap - to smooth the impacts of savings by providing temporary support to enable longer-term savings to be delivered.
Officers have so far identified a range of proposed savings totalling £42.3m over the next three years, 2023/24 to 2025/26.
As far as possible these are designed to protect the delivery of council priorities and consist mostly of efficiency savings and income generation measures, with service reductions only as a last resort.
The breakdown of identified proposed savings so far by Council directorate is:
Adult social care: £10m.
Public Health: £1m
Children and Education Services: £11.7m
Corporate Core: £6m
Growth and Development: £2m
Full details of the proposed savings can be found at www.manchester.gov.uk/budget
Further savings will need to be brought forward to address the full budget shortfall.
Examples of different types of proposed savings
Examples of proposed efficiency savings include:
Reducing costs by sustainably reducing demand for crisis services – helping people earlier so they do not need more intensive and expensive help later on, or supporting them to be more independent for longer.
The bulk of proposed savings in Children and Education Services over the next three years - £10.4m worth – would come through building on the success of early prevention work and other innovations to reduce demand for costly crisis services.
£4.4m of homelessness savings over three years through a managed reduction in the need for temporary accommodation including B&Bs. It will not involve any reductions to the service.
Adult social care also propose to achieve £2.3m of savings over the next three years through this approach while a further £4m is put forward through the redesign of provider services – such as supported accommodation, day services, transport arrangements and short breaks – to ensure people’s needs are met at the right level.
Reducing staffing budgets – but not overall staff numbers – to reflect the fact that there will always be vacancies at any given point through natural turnover. This is expected to save adult social care £1.6m over the next three years and the homelessness directorate around £200,000.
Shifting the funding of school crossing patrols from the children’s services budget to the parking and bus lane penalties reserve. This will save £386,000 from the council’s budget in 2023/24 with no reduction in service.
Examples of proposed income-related measures include:
Recognising increased rental income from council-owned properties of £1.6m over the next three years
Introducing charges for replacement recycling bins raising an estimated £400,000 in 2023/24
New advertising hoardings on Chester Rd roundabout raising an estimated £300,000 in 2024/25
Increasing Heaton Park parking charges and pay and display hours, raising £87,000 in 2023/24
Increasing registrars fees, raising an estimated £80,000 in 2023/24 and another £80,000 in 2024/25
A 10% increase on all bereavement services fees and charges, raising almost £750,000 over 2023/24 and 2024/25
Examples of proposed service reductions include:
Temporarily reducing roadside gully cleaning, saving £250,000 in 2023/24
Reducing the opening hours of Manchester Art Gallery by a day a week, saving £26,000 a year.
Cancelling New Year’s Eve fireworks in 2023/24 would save £50,000.
What they say
Council Leader Cllr Bev Craig said:
"Over the last 12 years we have had to make £428m of savings to cope with Government funding cuts and unavoidable cost pressures such as inflation and a growing population. Even if we'd had only the average council funding cut we would be £77m a year better off. Despite this we have prioritised the services which Manchester people have told us are the most important.
"Long term planning and this clear focus on residents' priorities has enabled us to navigate our way through successive challenging budgets while still moving the city forwards and protecting the most vulnerable.
"The latest budget will be no exception. The Council's budget has been badly hit by inflation and a volatile economy. but we know household budgets have too and many people in the city are struggling. It's a difficult balancing act but we are determined to support them and protect the services they rely on."
Councillor Rabnawaz Akbar, Executive Member for Finance, said:
“We and others have called on the Government to give councils extra funding to recognise the difficult economic climate. It does not look like this will be forthcoming.
“While we are having to make significant savings we are doing all we can to achieve this through planned efficiencies and maximising income rather than service reductions. We will also continue to invest in the future of the city and its people.”
The Council will not know its exact funding position until after its financial settlement from Government has been received. This is expected in late December and there will be an update on the latest position early in 2023.
The proposals will be considered at scrutiny committees between 8-10 November.
Public consultation on proposed Council Tax levels and proposed savings identified by officers will open on Monday 7 November and run until 7 January 2023. The results, and comments from scrutiny committees, will be factored into the proposed budget put forward by the Council’s Executive in February next year. The final budget will be agreed on 3 March 2023.