Covid-19 has had a significant impact on every part of our city and our lives. Unfortunately, the financial situation of the Council is no exception.
During the Covid-19 crisis, significant emergency resources were put in place such as the Manchester Community Response Hub which took over 18,000 calls and helped over 14,000 residents access food. 37,000 households have received Council Tax Support hardship payments so far and £145.5 million of business rate relief has been provided.
A severe drop in the Council’s various means of income and a dramatic rise in emergency expenditure lead to a significant projected budget gap. Earlier on, we were planning to hold an emergency budget setting process.
The Government has provided some support, but the amount allocated to Manchester does not adequately match the scale the impact of Covid-19. On the 16th March 2020, just before the UK entered lockdown, the Secretary of State for Local Government Robert Jenrick said: “This government stands with local councils at this difficult time… Everyone needs to play their part to help the most vulnerable in society and support their local economy. The government will do whatever is necessary to support these efforts.” Unfortunately, this promise has fallen far short of what is needed.
So far, £10.6 million in-year spend has been cutback and with the Government’s limited compensation, the in-year funding gap for 2020/21 has been reduced to £5.5 million. While this is still too high, it means there is no longer the imminent need to develop an emergency budget.
Unfortunately, some spending schemes have been cancelled. This includes the Spring Challenge Fund which Deansgate Councillor Marcus Johns successfully worked with colleagues to add to the budget back in March, which planned to invest in street trees on Great Marlborough Street, City Road East, and provide additional investment in the Castlefield Forum’s project to improve the Roman Gardens.
Looking ahead is deeply concerning. The Government has not made a longer term commitment to council funding and it is difficult to predict the picture for 2021/22. However, the current estimated loss of income which will need to be addressed in that year’s budget is £165.87 million. This is because losses in Council Tax and Business Rates are not reflected until the following year due in turn to the way Manchester City Council manages its budgets. We expect this challenge to increase further.
For context, in the total period of Conservative and Liberal Democrat austerity from 2010 to 2020, Manchester Council made cuts to its annual budget of £372 million.
Though this year’s budget is likely to be balanced, the problem has not been solved. We urgently need to Government to commit to fair funding for councils like Manchester and the unique challenges we face. We will continue to fight for this and for the funding we need for a strong recovery from this crisis for our city and its people.