Papers outlining how Manchester City Council intends to address a budget shortfall of up to £105m for 2021/22 are published today (Thursday 29 October 2020.)
That is the size of the budget gap faced if there is no extra Government funding for next year either through the impending financial settlement, or other means, to recognise the difficult position faced by the Council and its key role in the city’s response to the pandemic.
The financial impacts of the Covid-19 period - both through increased costs and lost commercial income - combined with pre-existing budget pressures (associated with supporting a growing population and inflation) mean the Council is currently facing a predicted budget shortfall of up to £105m in 2021/22, rising in 2022/23.
This comes on top of a decade of austerity which has already necessitated that we make £379m worth of cuts and reduce our workforce by 40%, equivalent to around 4,000 full time staff.
The Council is committed to delivering the priorities for Manchester including the work across health and social care to improve health outcomes, deliver affordable housing and achieve its carbon reduction ambitions. This is at the same time as grappling with the ongoing challenges of the pandemic and its economic impact. Work is taking place to look at the future shape of the Council, transforming how it operates, not just so it can rise to the immediate challenge but to futureproof the organisation.
But with fewer resources something will have to give. Reports published today, which will be considered by various scrutiny committees next week before going to the Council’s Executive on Wednesday 11 November, set out around £52m worth of cuts and savings options being put forward by officers.
These would involve reducing the Council’s workforce by almost 200 posts (full-time equivalent). The Council is working to avoid compulsory redundancies and achieve this through a mixture of vacancies, and targeted voluntary early redundancy and voluntary severance schemes focused on the areas where jobs are going.
The c.£52m potential programme breaks down (by directorate) as:
Health and Social Care integration: £20m savings through a reduced Council contribution to the pooled health and social care budget under devolution arrangements. Accelerating and extending the integration of the health and social care system will support a healthier population, which in turn will unlock savings. Earlier detection and prevention of problems can stop them escalating into long-term care needs and costs and help people to live more independently for longer.
Corporate Core: £7.1m cuts for this part of the council which brings together services which support the rest of the Council including ICT, Human Resources, Finance, Legal, Communications and Performance, Research and Intelligence (PRI) functions. This includes streamlining some services to either reduce their service offer or reduce overlaps with other roles. Under the proposals, for instance, a redesigned PRI structure would deliver savings of £0.5m. Other proposals would involve new ways of doing things - for instance, reviewing the council’s face-to-face Customer Services Centre.
Neighbourhood Services: £7.8m savings for this directorate which helps keep the city’s neighbourhoods clean, safe and vibrant. The proposed options envisage that this will largely be achieved through income generation for example an extra £4.5m in 21/22 through the council taking over running the city’s car park operation and £1.3m through increased advertising income.
Homelessness: Savings options of up to £3.6m are outlined through a transformation programme which will address systemic issues and focus on prevention. It will involve collaborating with voluntary and community sector and registered housing provider partners to reduce costs; a service restructure which will particularly focus on reducing layers of management and initiatives such as a new rapid rehousing scheme for homeless families which should reduce the cost of B&B accommodation. (The Council is also investing £2.8m of one-off capital funding to purchase 20 one-bed flats as move-on accommodation for homeless people in temporary accommodation – see separate news release about this Next Steps programme.)
Growth and Development: £2.3m is proposed to be found through a combination of efficiencies, such as reducing the number of buildings occupied because of new ways of working developed during the pandemic and deleting/not filling vacant posts and income generation such as increased surveyors’ fees.
Children’s Services: Much of the Children’s Services budget is devoted to caring for looked after children and safeguarding and will be protected. However, around £11.3m of other potential savings have been identified. Some £8.8m of these savings are envisaged through a range of efficiencies such as reduced legal fees (£260,000), fewer business support roles (£130,000) and a cut in the free school travel budget reflecting a reduced level of demand (£400,000).
Working with registered social housing providers to find homes for young people leaving care, rather than using private accommodation, will help care leavers to live independently in the community. While this change is about better outcomes for these young people rather than savings, it is anticipated it will also save around £1m in 21/22. Additional grant funding and charging schools for some services could contribute another £1m.
In addition to the c£52m savings which are being proposed, a range of possible further cuts adding up to around £30m have been identified. These are more severe measures which the Council is keen to avoid. They are not on the table on the moment but may come into play if Government funding for next year does not fully reflect the pressures on the Council. In this worst-case scenario, these options would need to be developed further and consulted on.
A consultation asking Manchester people, businesses and organisations what they think about the proposals will open on Wednesday 11 November and run until 6 January 2021. Options will also be subject to Equality Impact Assessments.
Also guiding decision-making will be a clear focus on the people’s priorities for the city which were informed by the major Our Manchester consultation exercises. These are protecting the most vulnerable, delivering the best services we can and early help to support people to deal with issues so they can avoid getting into greater difficulties - all underpinned by inclusive and sustainable job creation and Manchester’s goal of becoming zero carbon by 2038.
This, along with the financial settlement from the Government for 2021/22 which is expected later this autumn, will help shape the final proposals in the New Year. The final budget will be set on Friday, 5 March 2021.
Sir Richard Leese, Leader of Manchester City Council, said: “This is the most severe budget position we have faced.
“We will continue to press the Government for a fair financial settlement which recognises both the impacts of the Covid-19 pandemic and the critical role which the Council has to play in tackling it and leading the city’s wider recovery. At the start of this crisis the clear message from Government to local authorities was ‘spend what you need to’ but since then they have changed their tune. We need them to honour that original commitment. Failure to do so would mean that we will be forced into totally unpalatable cuts, ones we are desperate to avoid, fundamentally undermining our role within the city.
“Manchester is a resilient place which has overcome difficult circumstances before, emerging from the decline of the 1970s and 1980s, and more recently the shock of the 2008 global financial crash, to become the UK’s leading growth city. As we have shown over the last few weeks, the Council will continue to fight and do the best it can to support our people. We will transform ourselves to make sure we are ready for whatever challenge comes our way. As ever, there are opportunities as well as threats. But let’s not kid ourselves that it is going to be anything other than a difficult budget-setting period ahead.”