Council updates on its financial position for 2024/25

  • Tuesday 16 January 2024

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The potential budget gap facing Manchester City Council in 2024/25 has increased to £5m following receipt of the Government’s funding settlement. 

The impact of the settlement is a £2.4m worsening of the Council’s position from what was predicted in November last year, on top of the £1.6m gap which was projected at that time.  

Although the settlement does see increases in some elements, for example a £750k increase in Public Health Grant, these are outweighed by reductions. Most notable is a £6.1m cut in the Services Grant from £7.2m to just £1.1m - an 84% reduction in line with a disappointing national cut.  

A further £1m will need to be used to top up the General Fund reserve. Ongoing service pressures in 2023/24 have resulted in an increased in-year overspend which had to be met from that reserve.  

This updated analysis is contained in a report to the Council’s Executive which it will consider on Wednesday 17 January.  

The settlement figure effectively assumes that the Council will take the maximum Council Tax increase which is allowed without a referendum, 4.99% (A 2.99% increase in general Council Tax plus a 2% adult social care precept.)  

Councils nationally are experiencing considerable financial headaches as funding fails to keep pace with rising costs and demand for services. The Local Government Association have highlighted children’s social care costs (especially for specialist placements), homelessness costs (especially for temporary accommodation), adult social care costs (increased fees for both residential and at-home care and the impact of the increased National Living Wage) and home-to-school transport costs (especially for children with Special Educational Needs) as areas where increases are particularly marked nationwide. It is well documented that the whole local government sector is under financial pressure.  

This comes on top of years of austerity since 2010 which have undermined councils’ financial resilience. Over that period, Government funding cuts and unfunded pressures such as inflation and population growth have left the Council having to make £443m of savings.  

While the Council is still in a position to set a balanced budget for 2024/25, this has taken careful long-term planning. 

The Council last year approved £15m of savings for 2024/25 and the use of £17m of reserves to help cushion the impact of budget pressures so will need to find another £5m in savings or extra income. Further work is underway to achieve a balanced budget for 2024/25 and proposals will be presented to scrutiny committees and the Executive in February.  

Beyond 2024/25, the Council’s financial position is expected to become even more challenging. The projected budget gap for 25/26 is £36m, increasing to £55m in 2026/27. It is warned that there will be difficult decisions required to make to address this position. 

Council Leader Cllr Bev Craig said: “It feels like we’ve been saying this forever but sadly it remains absolutely true – our Government funding is not fair, adequate or sustainable.  

"We should never forget that Manchester, in common with other less affluent areas, has been hit disproportionately by Government funding cuts since 2010 and that if we’d had even the average reduction we would have more than £74m extra A YEAR to spend on services for the people of this city and wouldn’t be facing this tough position. It is not too late for the Government to listen to calls from councils across the country, irrespective of which political party leads them, to urgently address the outdated and unsustainable settlement the sector has received ahead of the Spring Budget. 

“Despite all this we are proud of our track record in delivering for the people of this city we love – whether it’s supporting the most vulnerable in our city, helping those most in need through the cost of living crisis, overseeing economic and population growth and working to make sure people are included in the benefits of that success or providing day-to-day services such as parks, libraries, leisure centres and waste collection in our neighbourhoods.” 

Cllr Rabanwaz Akbar, Executive Member for Finance, said: “Once again it’s disappointing that the Government have not listened to us and only given us a one-year financial settlement - which hampers our ability to plan ahead - as well as reducing funding more than anticipated. What we, and indeed all councils, are crying out for is adequate and sustainable long-term funding which would enable us to meet increasing demand and costs and use our resources to maximum effect.   

“This year, and especially the following two years, will be difficult but we will continue to take a strategic approach which delivers the services residents rely on while investing in the future of the city and its people." 

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