Tuesday, 8 February 2011

The budget Manchester City council might have set.


Much furore has surrounded the publications – amidst great fanfare – of Manchester City Council’s budget proposals for 2011/12. These proposals have been flagged up as terrible, draconian and are accompanied by appropriate hand-washing and wring from Sir Richard Leese, the Council leader:

People should blame the coalition for “ideological” cuts, he said. 

 “A responsible government would never have done this. We would not have been cutting as fast or as deep as we have been forced to do.

What follows is – so far as I can from the selective and selected information published in this Council’s Executive Papers – an attempt to show how Manchester City Council might set a budget with minimum impact on ‘front-line’ services.

But first let’s set the real measure of the reductions relative to Manchester City Council’s spending. We do not yet have the final accounts for 2010/11 (not surprising given that the year hasn’t ended) so – given that the published 2011/12 budget documents do not include this information – we will use 2009/10 final accounts as an indication of the City Council’s total spending. These Accounts show that total expenditure in that year was just a shade short of £1.8bn. It is safe for us to assume that the outturn for 2010/11 will be of the same magnitude (source: Annual Statement of Accounts 2009/10).

According to the published budget documents, there is a shortfall of £109m for 2011/12 – representing a reduction of approximately 6% in total spending. It is this reduction that has been the source of the furore. However, we need also to take note of some other information relevant to our discussions of this budget:

  1. The Council had already planned savings amount to £40m for 2011/12 as part of a medium term financial strategy agreed in February 2010 – before the budgets of 2010 and, of course, before the General Election
  2. Just over £30m of the grant reduction faced by Manchester comes from the ending of Working Neighbourhoods Fund (WNF) – this was a time-limited funded established as a successor to Neighbourhood Renewal Fund (NRF) and targeted to areas with the highest levels of worklessness. The fund was planned to end in March 2011.

So £70m of the £109m savings are already accounted for in the Council’s medium term strategies. True the end of WNF will result in the closing of some valuable programmes and activities and the tight financial situation makes mainstreaming difficult. Nevertheless, this reduction has to have been planned – assuming a modicum of financial good sense in Manchester.

Within the budget documents, the Council identify a further reduction of £11m in the cost of the ‘corporate centre’ which can be taken with additional savings (12-15m) in procurement and containing price rises to reduce the shortfall to around £13m. Still a significant sum perhaps resulting in some front line pain but not the screaming cuts decried by their proposer, Sir Richard Leese!

And now for the final revelation- Manchester City Council has nearly £270m in ‘useable reserves’ (Annual Accounts 2009/10) – money set aside for various prudent purposes. These reserves are provision for a rainy day, so-to-speak! And if now isn’t a rainy day, I don’t know what qualifies! Some of these reserves could be directed to smoothing the impact of service reductions, on developing community delivery and bringing voluntary organisations into service delivery and on ‘spend-to-save’ initiatives.

It seems to me that Manchester City Council had no need to make the sort of cuts it has proposed today. I will add the caveat that I am not party to all the financial information – only that provided by the Council in its public forums. And I’m not saying that any service changes aren’t needed – merely that the proposals seem to be about maximising the pain rather than making a steady, planned and strategic shift in the Council’s operations.

Feel free to rip into my calculations, question my assumptions and challenge whether or not there are service cuts in what I propose. But while you’re doing that think of the people of Manchester who seem to be facing targeted and painful service cuts – either to provide substantial cash headroom for future years or else so Sir Richard Leese can make a big political point.


1 comment:

SadButMadLad said...

It's called shroud waving.

They might get away with this deep painful cut and blame it on the coalition this time. But when they get found out and try and cover it up (as they are pre-programmed to do to cover their arses) it will only make things worse for the council.