Manchester City Council is facing an forecast budget overspend of £9.6m by the end of this financial year (2023/24.)
The projected figure, based on spending and income so far from April to the end of July 2023, is driven by rising social care costs – fuelled by inflation and pressures within the social care market – which have hit councils across the country.
These social care costs account for the vast majority of the forecast overspend.
Increased Children’s Services costs account for £4.9 million. These mainly relate to higher costs for supporting children and young people in residential and supported accommodation. Residential placement costs have gone up 44% in the current financial year.
Demand continues to increase for long-term care arrangements in Adult Social Care, both for older people and those with learning and physical disabilities. These account for another £3.7 million.
The remaining forecast overspend (around £0.9 million) consists of reduced car parking revenue relative to targets and extra costs for the May local elections caused by the introduction of national voter ID rules, offset by underspends in other departments.
The in-year budget pressure is in common with councils up and down the land. Some have been so badly affected that they have had to either issue section 114 notices – effectively declaring that a local authority cannot balance its budget and is effectively bankrupt – or warned that they may have to issue one. Due to sound long-term financial planning, Manchester City Council is not in this position.
With only four months gone of this financial year, officers are working on a range of mitigation measures to contain – and where possible reduce – the projected overspend albeit against a backdrop of inflationary and other cost-of-living pressures.
It should be noted that any end of year overspend has to be met out of the Council’s General Fund reserve – money put aside for unforeseen circumstances such as this – to balance the budget, although the reserve would need to be topped up in future years to ensure it remains at an appropriate level.
Any pressures contributing to current year’s overspend which continue into 2024/25 will need to be addressed in that year’s budget and may require additional savings.
Councillor Rabnawaz Akbar, Executive Member for Finance, said: “External factors beyond our control around social care costs have created pressures on budget for the current year which we are working hard to manage.
“Our financial position is difficult but not yet dire. This is because we have taken long-term financial decisions, even when they were challenging. It’s why we are opening new facilities, such as the transformed Abraham Moss Library and Leisure Centre rather than closing them.
“But councils across the country are experiencing severe financial challenges and the Government needs to take urgent action to address these pressures and make sure local authorities are put on a sustainable financial footing. When you get numerous councils warning that they are on the brink of bankruptcy, it should serve as a warning that the whole system is underfunded.”
