Report on the Revenue and Capital Budgets 2009/10 to Executive 11 February 2009

Manchester City Council Item 5 Executive 11 February 2009

Manchester City Council Report for Resolution

Report To: Executive - 11 February 2009

Subject: Medium Term Financial Plan 2009/10 to 2011/12 and Revenue Budget 2009/10, Three Year Capital Programme 2009/10 to 2011/12 (Including Capital Strategy and 2009/10 Capital Monitoring Update), and Treasury Management Strategy Statement & Borrowing Limits a nd Annual Investment Strategy 2009/10

Report of: The City Treasurer and Chief Executive

Summary The report presents for members approval:

• The Medium Term Financial Plan for the 3 years 2009/10 to 2011/12 • The Revenue budget for 2009/10 • The three year Capital Programme 2009/10 to 2011/12 (including the Capital Strategy and 2008/9 capital monitoring update) • The Treasury Management Strategy Report.

Members are asked to note that as the above documents are all inter linked and based on the same underlying assumptions, any amendments to, or non acceptance of, key recommendations on one report may impact on the others.

Recommendations To approve the following recommendations:

Annex 1 - Medium Term Financial Plan 2009/10 to 2011/12 and Revenue Budget 2009/10

1. Note the results of the final RSG settlement for Manchester for 2009/10, the likely settlement figure for 2010/11 and the current planning assumption for 2011/12.

2. Note the outcome of the budget consultation process (summary of responses shown in appendix 6 – a copy of the full responses will be available at the meeting).

3. Approve the three year Medium Term Financial Plan as described in the report and summarised in the table in paragraph 7.4 of the report, having regard to the Treasurer’s view on the robustness of the estimates and the adequacy of reserves.

Manchester City Council Item 5 Executive 11 February 2009

4. As part of the Medium Term Financial Plan approve the proposed budget for 2009/10 as final and the budgets for 2010/11 and 2011/12 as indicative subject to review on an annual basis as part of future business planning processes.

5. As part of the Medium Term Financial Plan, specifically approve the following: a. the contingency sum of £9.914m in 2009/10, with indicative sums of £10.449m in 2010/11 and £11.338m in 2011/12 (para. 4.17) b. Departmental Cash Limit Budgets totaling £443.377m for 2009/10 and indicative departmental budgets of £445.199m and £447.426m for 2010/11 and 2011/12 (including growth and efficiencies – appendix 1). c. Corporate Budget requirements to cover the cost of levies and Capital Financing Costs of £92.214m for 2009/10 with indicative sums of £97.904m in 2010/11 and £106.056m for 2011/12 (as outlined in section 4 of this report subject to final notification of Levies from other bodies) d. The utilisation of the Service Improvement Fund (SIF) in 2009/10 to fund part of the costs of the Manchester Improvement team (£2.416m), and the use of SIF resources over the next three years to fund the CRM development and rollout (£3.989m) and the Customer Strategy (£1.107m) and Information Strategy (£0.745m) as proposed in paragraph 10.9 to 10.10.

6. Approve the proposed utilisation in 2009/10 of £2.095m (as per paragraph 3.19) of the surplus from the on street parking reserve and Bus Lane enforcement reserve after determining that any surplus from these reserves is not required to provide additional off street parking in the authority.

7. Note the position on reserves as identified in the report and in Appendix 5 subject to the final call on reserves after any changes are required to account for final levies etc.

8. Approve delegated authority to the City Treasurer to amend departmental cash limit budgets to take account of savings arising from corporate procurement activity and housekeeping savings before 1 April 2009 and throughout 2009/10 and the allocation from contingency of reductions to pay and inflation assumptions.

9. Approve the list of growth proposals as detailed in section 6 of the report subject to corporate assessment of value for money and impact on corporate priorities through the Revenue Gateway Process.

10. Approve that delegated authority be given to the City Treasurer and Chief Executive, in consultation with the Executive Member for Finance and Human Resources and the Leader of the Council to draft the recommended budget resolution for budget setting council in accordance with the legal requirements outlined in the report from the City Solicitor elsewhere on the agenda and taking into account the decisions of Executive and any final changes to account for final announcements on levies and other small technical adjustments.

Manchester City Council Item 5 Executive 11 February 2009

11. Approve the target trading surpluses and deficits for the trading services in 2009/10 as outlined in section 13 of the report

12. Approve the Prudential Indicators for 2009/10 to 2011/12 as presented in Appendix 4 subject to any final adjustments that may be made arising from recommendations above.

13. Approval of the Medium Term Financial Plan for the next three years as outlined in the report and the indicative budget figures included in the recommendations above is subject to the need to reassess budgets for 2010/11 and 2011/12 on an annual basis as part of a three year rolling budget programme to take account of potential changes to needs and / or resources.

Annex 2 - Three Year Capital Programme 2009/10 to 2011/12 (including Capital Strategy and 2008/9 capital monitoring update)

1. Note that the capital strategy has been updated and to agree the amended version as presented in Appendix D

2. Note that the latest estimate of capital outturn for 2008/09 is £327,621,000

3. Note the capital programme report as presented.

4. Agree that additional unsupported borrowing currently estimated to be £41,178,000 will be required to finance

• the delivery of the current 3 programme, • the new proposals identified in this report where alternative funding sources have not been identified and • the reservation of resources to provide funding for further spending proposals that will be subject to the agreement of the Executive, and to request that the City Council delegate authority to the Executive to increase the capital budget accordingly .

5. Recommend to the City Council for approval the three year capital programme 2009/10 to 2011/12 as presented in Appendix C, agreeing that the housing programme is subject to confirmation as to its affordability and will be the subject of a further report to Executive

6. Delegate authority to;

(a) The Chief Executive in consultation with the Leader and Executive Member for Planning and Environment for the approval of the list of schemes to be undertaken under the Transport capital programme,

Manchester City Council Item 5 Executive 11 February 2009

(b) The Head of Engineering to implement these schemes after consultation with the Executive Member for Planning and Environment on the final details and estimated costs.

7. Delegate authority to the City Treasurer in consultation with the Executive Member for Finance and Human Resources to approve unsupported borrowing of up to £5,000,000 in 2009/10 and a further £5,000,000 in each of the two following years for spend to save proposals, where the cost of borrowing (interest and principal repayment in full) for each project can be financed from additional income and / or savings within existing revenue budget limits for the lifetime of the loan period.

8. Delegate authority to the City Treasurer, in consultation with the Executive Member for Finance and Human Resources to accelerate schemes within the three year programme when necessary from 2010/11 and 2011/12 to 2009/10 and / or 2010/11 subject to resource availability.

9. Delegate authority to the City Treasurer in consultation with Executive Member for Finance and Human Resources to agree and approve where appropriate the following: (a) The programme of schemes for the delivery of the corporate asset management programme. (b) Financial management decisions relating to temporary unsupported borrowing and the investment of surplus resources.

10. That authority be delegated to the City Treasurer in consultation with the Executive Member for Finance and Human Resources to make alterations to the schedules for the 3 year capital programme 2009/10 to 2011/12 prior to their submission to Council for approval, 11. Where there exists clearer information relating to the availability of external funding resource or 12. Where expenditure profiles have altered, subject to no changes being made to the overall estimated total cost of each individual project

Annex 3 - Treasury Management Strategy Statement & Borrowing Limits and Annual Investment Strategy 2009-10

To note the proposed Treasury Management Strategy Statement and approve:- 1. The Prudential Indicators referred to in section 3 and listed in Appendix 4 to Annex 1 of this report. 2. The Borrowing Requirements listed in section 5. 3. The Borrowing Strategy outlined in section 8. 4. The MRP Strategy outlined in section 9. 5. The Annual Investment Strategy detailed in section 10.

Manchester City Council Item 5 Executive 11 February 2009

Resolution covering both Revenue and Capital reports:

Both the Revenue and Capital budget reports include the use of Grant resources. At this stage an assumption has had to be made on the split of some of these resources between Revenue and Capital and members are asked to:

1. Approve that delegated authority be given to the City Treasurer in consultation with the Chief Executive and the Executive Member for Finance and Human Resources to amend this split in the light of changing requirements.

Wards Affected: The report affects all wards

Community Strategy Spine Summary of the contribution to the strategy

Performance of the economy of The report presents for members the proposed the region and sub region revenue and capital budgets for the Council which contribute to all the strategy spines. Reaching full potential in education and employment

Individual and collective self esteem – mutual respect

Neighbourhoods of Choice

Full details are in the body of the report, along with any implications for:

• Equal Opportunities Policy • Risk Management • Legal Considerations

Financial Consequences – Revenue and Capital This report seeks approval to a Medium Term Financial Plan for 2009/10 to 2011/12 and a draft revenue budget for the Council for 2009/10. It also seeks approval to a revised capital strategy, a three year capital programme for 2009/10 to 2011/12 and a Treasury Management Strategy. These reports together underpin the detailed financial spend of the Council for the coming year and provide a framework for Revenue and Capital planning for the following two years.

Manchester City Council Item 5 Executive 11 February 2009

Contact Officers:

Name: Richard Paver Name: Sir Howard Bernstein Position: City Treasurer Position: Chief Executive Telephone: 234 3564 Telephone: 234 3201 E-mail: [email protected] E-mail: [email protected]

Name: Carol Culley Name: Stephen Carey Position: Head of Financial Management Position: Head of Finance Group Telephone: 234 3509 Telephone: 234 3448 E-mail: [email protected] E-mail: [email protected]

Name: Dave Channon Name: Kevin McDonough Position: Capital Accountant Position: Treasury Manager Telephone: 234 3292 Telephone: 234 3459 E-mail: [email protected] E-mail: [email protected]

Background documents (available for public inspection):

RSG Revenue Settlement Papers Budget Consultation Document Budget Consultation Responses

Manchester City Council Item 5 Executive 11 February 2009

Covering Report

1. The Local Government Act 2003 introduced the Prudential Borrowing framework which for 2004/5 onwards replaced the previous controls on an authority’s borrowing. The new system relies on establishing local values for a number of nationally prescribed indicators which can be used to identify whether an authority is acting “prudently” and that its capital spending proposals are affordable in the long term within the resources available to the authority. These indicators need to be approved by members as part of the budget setting process.

2. In support of the principal of prudent decision making, the Act also requires the Chief Financial Officer to report on his assessment of the “robustness” of the proposed estimates and the adequacy of the level of general reserves that will be held by the authority. To support this the act requires details of specific reserves held by the authority to be reported, including the size of the reserve, what the reserve is held for, who can authorise the use of the reserve and what plans there are for movements in to and out of these reserves.

3. The introduction of the prudential framework in 2004/5 means that the Revenue and Capital Budgets and the Council’s Treasury Management Strategy are now more closely linked than previously through the prudential indicators and as such have to be considered together. In addition, in order to aid future forward planning and comply with best practice, it is necessary to agree a Medium Term Revenue Plan and a Capital Strategy which provide a framework for future planning. The Government have now introduced three year financial settlements for Councils (the current settlement is for the years 2009/10 and 2011/12). Although the new three years settlement has brought a degree of stability to the budget projections for future years the Executive are asked to approve the Medium Term Financial Plan on the basis that years 2 and 3 are indicative and subject to review through the annual budget process.

4. The Annexes and appendices to the report are presented in the following order:

• Annex 1 – Medium Term Financial Plan 2009/10 to 2011/12 and Revenue Budget 2009/10 Appendices to Annex 1:

1. Proposed Business Plan Cash Limits 2. List of Service Efficiency Savings 3. List of Service Growth Bids 4. List of Prudential Indicator’s 5. List of specific reserves 6. Feedback from Budget Consultation exercise

• Annex 2 – Three Year Capital Programme 2009/10 to 2011/12 (including Capital Strategy and 2008/9 capital monitoring update)

o Appendix A Housing Programme Manchester City Council Item 5 Executive 11 February 2009

o Appendix A (i) Housing Capital Investment Table o Appendix B Transport Programme o Appendix C Detailed Three Year Capital Programme o Appendix D Capital Strategy

• Annex 3 - Treasury Management Strategy Statement & Borrowing Limits and Annual Investment Strategy 2009-10 o Appendix A Interest Rate Forecasts o Appendix B Glossary of terms

5. Each annex contains a list of detailed recommendations which are listed at the front of this covering report however members need to bear in mind that any amendments to, or non acceptance of, key recommendations on one report may impact on the others.

Manchester City Council Item 5(a) Executive 11 February 2009

MANCHESTER CITY COUNCIL REPORT FOR RESOLUTION

REPORT TO: Executive - 11th February 2009 Resources and Governance Overview and Scrutiny Committee - 23rd February 2009 City Council - 4th March 2009

SUBJECT: Legal Background to Setting of Budget and Council Tax

REPORT OF: The Chief Executive and The City Solicitor

Summary

This report aims to assist all members of the Council in consideration of the complex legal background to their budgetary and Council Tax decisions and in particular to set out the legal factors and requirements which Members of the City Council need to consider in reaching decisions on the budget and Council Tax.

The Report is structured as follows:-

Parts 1 - 2 deal with the principles of Council Tax setting and the general legal duties of the City Council in decision-taking.

Parts 3 - 5 deal with calculating the budget requirement and "capping".

Part 6 deals with calculating the City Council element of the Council Tax.

Part 7 deals with setting the overall Council Tax

Part 8 deals with the respective roles of the Executive, the Overview and Scrutiny committee, and the Council.

Part 9 deals with restrictions on voting for members with Council tax arrears.

Recommendations

That the Executive, the Resources and Governance Overview and Scrutiny Committee and the City Council take this advice into account and follow its principles in reaching decisions in relation to the budget and Council Tax for 2009/10.

Manchester City Council Item 5(a) Executive 11 February 2009

Wards affected: All

Implications for:

Equal Opportunities Risk Management Legal Considerations Yes Yes Yes

Financial Consequences for the Revenue Budget

The calculation of the budget requirement effectively sets the revenue budget for 2009/10.

Financial Consequences for the Capital Budget

Capital expenditure can be financed out of the revenue budget, if Members so determine.

Contact Officers

Name: Susan Orrell Position: City Solicitor Telephone: 234 3087 E-mail: [email protected]

Name: Rodney Lund Position: Assistant City Solicitor Telephone: 234 4019 E-mail: [email protected]

Background Documents (available for public inspection)

Report to City Treasurer and Executive Member for Finance and Human Resources and Decision of the City Treasurer on the Council Tax Base 2009/10 dated 25 th January 2009.

Manchester City Council Item 5(a) Executive 11 February 2009 LEGAL BACKGROUND TO REVENUE BUDGET AND COUNCIL TAX

1. INTRODUCTION

1.1 The Council Tax is basically a tax on property with a personal element in the form of a discount in respect of dwellings with less than two relevant residents. All dwellings are listed in one of eight valuation bands and the amount of Council Tax payable in respect of each dwelling (before discounts and other reductions) is in a set proportion between each band. The Headline Tax is calculated for Band D and the tax in the remaining bands is worked out as a proportion of this amount. The lowest Band (A) is two-thirds of Band D and the highest Band (H) is twice Band D and three-times Band A. The proportions are as follows:-

A: B: C: D: E: F: G: H: 6: 7: 8: 9: 11: 13: 15: 18:

1.2 There are three main stages in setting the Council Tax:-

STAGE 1 - The Council calculates is own budget requirement, i.e. its net revenue expenditure - this is the amount which is subject to capping by the Secretary of State.

STAGE 2 - The Council then calculates the Manchester City Council element of the Council Tax for all bands based on a calculation for Band D - this will take account of the Council Tax base calculated at an earlier stage.

STAGE 3 - Finally, the Council sets the Council Tax for the area, being the aggregate of the City Council element of the tax and the element of the tax calculated by the Police Authority and the Fire and Civil Defence Authority.

2. THE COUNCIL'S LEGAL DUTIES

2.1 In coming to decisions in relation to the revenue budget and the Council Tax the City Council - and Councillors - have various legal duties, namely:-

(a) The Council must act in accordance with its statutory duties and responsibilities. (b) The Council must act reasonably.

Manchester City Council Item 5(a) Executive 11 February 2009 (c) The Council must not act in breach of its fiduciary duty to its ratepayers and Council Tax payers.

2.2 Reasonableness

The Council must act in accordance with the principles set out in the case of Associated Provincial Picturehouses Limited -V- Wednesbury Corporation , that is, it must take into account relevant considerations, it must not have regard to irrelevant considerations, and it must not reach a decision which is unreasonable in the sense that it is so irrational or perverse that no reasonable authority could have reached it.

2.3 Fiduciary Duty

Fiduciary duty is hard to define. In Roberts -V- Hopwood (1925), it was said that a local authority charged with the administration for definite purposes of funds contributed in whole or in part by ratepayers owes a duty "to conduct that administration in a fairly business-like manner with reasonable care, skill and caution, and with a due and alert regard to the interest of those (ratepayers)" towards whom the authority "stands somewhat in the position of trustees or managers of the property of others". The same principle applies in relation to Council Tax payers.

Fiduciary duty will probably include the following considerations:-

(a) Prudent use of the Authority's resources, including the raising of income (such as rents and other charges) and the control of expenditure;

(b) Awareness of the financial consequences of any proposal of Council Tax payers and Ratepayers;

(d) Striking a fair balance between the interests of Council Tax payers and ratepayers on the one hand, and the community's interest in adequate and efficient services on the other hand;

(e) Acting in good faith with a view to complying with statutory duties and exercising its statutory powers for the benefit of the community.

2.4 Statutory Duty

As part of the budget and the Council Tax fixing process, the Council is required by the Local Government Finance Act 1992 to make various specific calculations and decisions:-

(a) it must calculate its budget requirement in accordance with Section 32 of the Act:

Manchester City Council Item 5(a) Executive 11 February 2009 (b) it must calculate the City Council element of the Council Tax - first for Band D and then for all bands - in accordance with Sections 33 to 36;

These requirements will now be analysed in greater detail.

3. STAGE 1 - THE COUNCIL'S BUDGET REQUIREMENT

3.1 Section 32 of the LGFA 1992 requires the Council to make three calculations, in effect -

(i) an estimate of the Council's gross revenue expenditure - Section 32(2);

(ii) an estimate of anticipated income - Section 32(3)

(iii) a calculation of the difference between (i) and (ii) above, (i.e. net revenue expenditure) - Section 32(4).

3.2 More specifically, in its Section 32(2) calculation of gross expenditure the Council should include -

(a) estimated revenue account expenditure to be incurred during the year;

(b) an appropriate allowance for contingencies (i.e. an allowance for unforeseen events);

(d) any estimated revenue account deficit for previous years not already provided for;

(e) an estimate of certain amounts to be transferred to the collection fund pursuant to a direction of the Secretary of State (e.g. any estimated shortfall in collection of National Non-Domestic Rates (NNDR) in excess of allowance for non-collection).

3.3 The Section 32(3) calculation is the aggregate of the sums to be set off against gross expenditure, namely -

(a) estimated income from fees, charges and most specific grants (but excluding Revenue Support Grant (RSG) redistributed NNDR and additional grant for previous years)

(b) an estimate of certain transfers from the collection fund to the general fund e.g. allowance for costs of collecting business rates;

Manchester City Council Item 5(a) Executive 11 February 2009 (c) any amount of reserves/balances intended to be used towards meeting revenue expenditure.

3.4 Section 32(4) then requires the calculation under Section 32(3) to be subtracted from that under Section 32(2) to produce a calculation of estimated net expenditure known as the budget requirement.

3.5 These calculations must be made before 11th March, although they are not invalid merely because they are made on or after that date. However, until the calculations are made any purported setting of the Council Tax will be treated as null and void.

3.6 It should be noted that the general fund has to stand the cost of any temporary lending to the collection fund to cover late payments/non-collection.

3.7 In making the Section 32 calculations, the Council will need also to calculate the level of financial reserves which it proposes to leave in balances.

3.8 Schools budget related expenditure is no longer financed through RSG, NNDR and council tax, but rather through a ring-fenced Dedicated Schools Grant (DSG). Schools expenditure calculated under Section 32 (2)(a) will be offset by the DSG which will be included in the calculation under Section 32 (3)(a), thereby reducing both the amount of the budget requirement and the amount of RSG received.

4. THE LEVEL OF THE BUDGET REQUIREMENT

4.1 The level of the Section 32 calculations, and in particular the calculation of the budget requirement is of crucial importance both legally and financially. In particular -

the amount of the budget requirement must be sufficient to meet the Council's budget commitments and thereby ensure a balanced budget.

the amount of the budget requirement must leave the Council with adequate financial reserves.

the level of the budget requirement must not be unreasonable having regard to the Council's fiduciary duty to its Council Tax payers and ratepayers.

the amount of the budget requirement may determine whether or not the Council is designated for "capping".

4.2 Adequacy of Budget Requirement and Financial Reserves

As has been seen, Section 32 requires the Council to calculate its gross expenditure under 5 separate headings and its offsetting income under three headings. Beyond that, the Act offers no guidance as to the detail in which the estimates are to be formulated.

Manchester City Council Item 5(a) Executive 11 February 2009 4.3 However, the Local Government Act 2003 requires the Chief Finance Officer to report to the authority on the robustness of the estimates made for the purposes of the calculations and the adequacy of the proposed financial reserves. This will include estimates and reserves used for the purpose of the Executive’s recommendations to Council and for the purpose of any amendments to those recommendations. The Council has a statutory duty to have regard to the Chief Finance Officer’s report when making decisions about the Section 32 calculations.

4.4 If the calculation of the budget requirement is insufficient to meet budget commitments, there are obvious practical as well as legal consequences for the Council. It is appropriate at this point to mention the duties imposed on the Council and the City Treasurer as Chief Finance Officer of the Authority.

4.5 Section 28 of the Local Government Act 2003 imposes a statutory duty on the Council to monitor during the financial year its expenditure and income against the budget calculations. If the monitoring establishes that the budgetary situation has deteriorated, the Council must take such action as it considers necessary to deal with the situation. This might include, for instance, action to reduce spending in the rest of the year, or to increase income, or to finance the shortfall from reserves.

4.6 Under Section 114 of the Local Government Finance Act 1988, where it appears to the Chief Finance Officer that the expenditure of the authority incurred (including expenditure it proposes to incur) in a financial year is likely to exceed the resources (including sums borrowed) available to it to meet that expenditure, the Chief Finance Officer has a duty to make a report to the Council.

4.7 The report must be sent to the Council’s Auditor and every member of the Council and the Council must consider the report within 21 days at a meeting where it must decide whether it agrees or disagrees with the views contained in the report and what action (if any) it proposes to take in consequence of it. In the intervening period between the sending of the report and the meeting which considers it, the authority is prohibited from entering into any new agreement which may involve the incurring of expenditure (at any time) by the authority, except in certain limited circumstances where expenditure can be authorised by the Chief Finance Officer. Failure to take appropriate action in response to such a report may lead to the intervention of the Council’s Auditor.

4.8 The Level of Section 32 Calculations

The next issue relates to the reasonableness of the level of expenditure calculated under Section 32. There were a series of cases in early 1980's where Plaintiffs sought to challenge the legality of the rate by arguing that a local authority was in breach of its fiduciary duty and acting unreasonably by overspending. Although such an argument succeeded in the case of R -V- GLC, ex parte, London Borough of Bromley , the Courts restricted the ambit of that decision in subsequent cases. Whilst the Courts have avoided saying

Manchester City Council Item 5(a) Executive 11 February 2009 that a high level of expenditure will never be unreasonable, it does now seem that expenditure levels will not be regarded as unreasonable provided that they can be justified, are not irrational and the Authority is taking into account all relevant considerations, including the fiduciary duty to those paying the tax (R -V- Waltham Forest LBC, ex parte Baxter).

4.9 In reaching decisions on expenditure levels Councillors must not fetter their discretion by treating as decisive a proposal or proposals in their election manifesto. Each decision must be reached anew in the light of all known factors, but members may properly take into account their election manifesto when deciding between lawful options.

5. "CAPPING"

5.1 Part II of the Local Government Act 1999 instituted a new and rather complicated regime in relation to "Capping" of expenditure. Nevertheless, the Secretary of State still retains wide reserve powers where in his/her opinion the amount calculated by an authority as its budget requirement is excessive.

5.2 The Secretary of State must first decide if the budget requirement is excessive. S/he will determine a set of principles which will be used to decide this and the principles must include a comparison with the budget requirement of previous years. Manchester’s budget requirement in 2008/09 was £457,290,718.

5.3 The Minister for Local Government has indicated that he would expect to see Council tax increases to be “substantially below 5%”.

5.4 If the Secretary of State decides the budget requirement is excessive, s/he may designate the authority "in-year" (i.e. for that financial year), or s/he may exercise a range of alternative powers.

5.5 Where an authority is designated for capping "in-year", the legislation provides for the following procedure. The Secretary of State must notify the authority in writing that it has been designated, the principles applied and the amount which s/he proposes should be the maximum amount for the budget requirement. The authority then has 21 days to accept the maximum amount or to challenge it and put forward an alternative which will have to be considered by the Secretary of State. If s/he still considers that the authority should be capped "in-year", s/he may fix an amount which is the same, or greater or smaller than, that stated in the original notice. The authority will then be required to make substituted calculations to comply with the expenditure limitation. If the original council tax demands have already been prepared or sent out, the authority would have to prepare and send out revised demands - thereby delaying the receipt of council tax income and incurring additional interest charges. It would then have to make cuts in expenditure with immediate effect without any "breathing space" to mitigate their impact.

Manchester City Council Item 5(a) Executive 11 February 2009 5.6 However, Part II of the 1999 Act gives the Secretary of State alternative powers:

* S/he may cap an authority for the following year, thereby avoiding the re-billing costs of "in-year" capping.

* S/he may cap an authority over a number of years, starting either in- year or the following year, and enabling expenditure to be reduced over longer periods.

* S/he may decide not to designate an authority but to set a notional (lower) budget requirement for the year under consideration which will be taken into account instead of the actual budget requirement for the purpose of any future comparisons with that year's budget.

6. STAGE 2 - CALCULATING CITY ELEMENT OF COUNCIL TAX

6.1 Having calculated its budget requirement, the Council is then required to calculate its own element of the Council Tax first for Band D (Section 33) and then for all 8 bands as a proportion of the Band D calculation (Section 36). The City element of the Council Tax has to finance that part of the budget requirement which cannot be financed by RSG and redistributed non- domestic rates, plus the Council's share of the deficit on the collection fund.

6.2 The Section 33 Calculation

The City Element of the Band D Council Tax is known as the basic amount of Council Tax. This is calculated by applying the following formula -

R-P T where - R is the budget requirement P is the aggregate of RSG redistributed non-domestic rates and additional grant for previous years, reduced by the estimated collection fund deficit (or increased by any estimated surplus) T is the Council Tax base.

6.3 Collection Fund Deficit

Any deficit on the collection fund from preceding years has to be financed through the Council Tax. Such a deficit is shared "pro rata" with the precepting authorities. The required calculations had to be made on 15th January and the appropriate shares of the deficit notified to the precepting authorities.

Manchester City Council Item 5(a) Executive 11 February 2009 6.4 Council Tax Base

The Council Tax base is basically the Band D - equivalent number of properties in the City adjusted to take account of discounts etc and multiplied by the estimated collection rate. The City Treasurer acting under delegated powers has calculated the council tax base for 2009/10 to be 121,127 an increase from 118,844 in 2008/09.

6.5 The Section 36 Calculation

Having calculated the basic amount of Council Tax (i.e. the City element of the Band D tax) the Council is then required to convert it into a City element for all Bands by multiplying it by the formula N/D where -

N is the proportion for the band as set out below and D is 9.

6.6 The proportions for each band are as follows:- A: B: C: D: E: F: G H: 6: 7: 8: 9: 11: 13: 15: 18

6.7 The Council's demand on the Collection Fund

One further calculation to be made is of the amount to be transferred from the collection Fund to the General Fund during the year, i.e, the Council's demand on the Collection Fund. In effect, this amount will be that part of the budget requirement not financed by RSG and redistributed NDR, plus the Council's share of the Collection Fund deficit. Another way of putting this is the formula set out in Section 97(1) of the Local Government Finance Act 1988, namely -

B X T

Where - B is the basic amount of Council Tax calculated under Section 33 (i.e the City element of Band D, and T is the Council Tax base.

7. STAGE 3 - SETTING THE COUNCIL TAX

7.1 The final part of the process is for the Council as billing authority to set the overall Council Tax for each band. Whereas the billing authorities and major precepting authorities calculate their own budget requirements, their own basic amounts and amounts for each band, the setting of the Council Tax is solely the responsibility of the City Council as billing authority.

7.2 Section 30 of the 1992 Act provides that the amounts set for each band will be the aggregate of the City element for each band calculated under Section 36 and the amount calculated for each band by each of the major precepting authorities.

Manchester City Council Item 5(a) Executive 11 February 2009 7.3 The Council Tax must be set before 11th March (i.e no later than 10th March), although it is not invalid merely because it is set on or after that date.

7.4 The Council Tax cannot be set before 1st March unless all precepting authorities have issued their precepts; nor can it be set before the Council has made the other required calculations. Otherwise, any purported setting of the tax will be treated as not having occurred.

7.5 The City Council has a clear legal duty to set a Council Tax and a resolution not to set a Council Tax would be unlawful, being in breach of Section 30, LGFA 1992. So would be a resolution to set a Council Tax which deliberately did not balance the various calculations.

7.6 A draft resolution for setting the Council Tax is attached at Appendix 1.

8. CONSTITUTIONAL ARRANGEMENTS

8.1 Members should note that under the Council’s constitutional arrangements, the functions of calculating the budget requirement and the City element of the Council Tax and the function of setting the Council tax are the responsibility of the full Council. The function of preparing estimates and calculations for submission to Council is the responsibility of the Executive.

8.2 The Council’s Constitution provides a procedure for the resolution of any conflict between the Executive and the Council which gives effect to the Local Authorities (Standing Orders) (England) Regulations 2001. However, this only applies where the estimates and calculations are prepared by the Executive before 8th February. That will not happen this year and any conflict can be resolved through the scrutiny process. The Budget and Policy Framework Rules provide that where the Resources and Governance Overview and Scrutiny Committee has any objection to the estimates and calculations prepared by the Executive, it will report such objections to the Council, the Leader and the Executive Member for Finance and Human Resources. The Leader and/or the Executive Member will report to the Council whether they agree or disagree with any objection of the Overview and Scrutiny Committee.

9. RESTRICTIONS ON VOTING

9.1 Members should be aware of the provisions of Section 106 of the Local Government Finance Act 1992, which applies to members where -

(a) they are present at a meeting of the Council, the Executive or a Committee and at the time of the meeting an amount of council tax is payable by them and has remained unpaid for at least two months, and

(b) any budget or council tax calculation, or recommendation or decision which might affect the making of any such calculation, is the subject of consideration at the meeting.

Manchester City Council Item 5(a) Executive 11 February 2009 9.2 In these circumstances, any such members shall at the meeting and as soon practicable after its commencement disclose the fact that Section 106 applies to them and shall not vote on any question concerning the matter in 9.1 (b) above. It should be noted that such members are not debarred from speaking on these matters.

9.3 Failure to comply with these requirements constitutes a criminal offence, unless any such members can prove they did not know that Section 106 applied to them at the time of the meeting or that the matter in question was the subject of consideration at the meeting.

10. RECOMMENDATIONS

The Executive, the Resources and Governance Overview and Scrutiny Committee and the City Council are asked to take this advice into account and to follow its principles in reaching decisions in relation to the budget and Council Tax for 2009/10.

Manchester City Council Item 5(a) Executive 11 February 2009 APPENDIX 1

COUNCIL TAX DRAFT RESOLUTION SETTING THE AMOUNT OF COUNCIL TAX FOR THE COUNCIL'S AREA

RESOLVED

1. That the estimates prepared by the Executive at its meeting on 11th February 2009 be [approved/amended as follows ...... ]

2. That it be noted that the City Treasurer acting under delegated powers has determined the amount of [121,127] as the Council Tax base for Manchester for the year [2009/10] in accordance with Section 33(5) of the Local Government Finance Act 1992 and regulations 3 and 5 of the Local Authorities (Calculation of Council Tax Base) Regulations 1992, as amended.

3. That the following amounts be now calculated by the Council for the year [2009/10] in accordance with Sections 32 to 36 of the Local Government Finance Act 1992:-

(a) £ being the aggregate of the amounts which the Council estimates for the items set out in the Section 32(2)(a) to (e) of the Act.

(b) £ being the aggregate of the amounts which the Council estimates for the items set out in Section 32(3)(a) to (c) of the Act.

(c) £ being the amount by which the aggregate at 3(a) above exceeds the aggregate at 3(b) above, calculated by the Council, in accordance with Sections 32(4) of the Act, as its budget requirement for the year.

(d) £ being the aggregate of the sums which the Council estimates will be payable for the year into its general fund in respect of redistributed non-domestic rates, revenue support grant or additional grant reduced by the amount of the sums which the Council estimates will be transferred in the year from its general fund to its collection fund in accordance with the formula set out in Section 33(3) of the Local Government Act 1992, as amended.

(e) £ being the amount at 3(c) above less the amount at 3(d) above, all divided by the amount at 2 above, calculated by the Council in accordance with Section 33(1) of the Act, as the basic amount of its Council tax for the year.

Manchester City Council Item 5(a) Executive 11 February 2009

(f) Valuation Bands

A B C D E F G H

being the amount given multiplying the amount at 3(e) above by the number which, in the proportion set out in Section 5(1) of the Act, is applicable to dwellings listed in a particular valuation band divided by the number which in that proportion is applicable to dwellings listed in valuation band D, calculated by the Council, in accordance with Section 36(1) of the Act, as the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands.

4. That it be noted that the following amount to be transferred by the Council for year [2009/10] from its collection fund to its general fund in accordance with Section 97(1) of the Local Government Finance Act 1988:-

£ being the amount given by multiplying the amount at 3(e) above by the amount at 2 above.

5. That it be noted that for the year [2009/10] the major precepting authorities have stated the following amounts in precepts issued to the Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:-

Precepting Valuation bands authority

A B C D E F G H

GM Police Authority £

GM Fire and Civil Defence Authority £

6. That, having calculated the aggregate in each case of the amounts at 3(f) and 5 above, the Council, in accordance with Section 30(2) of the Local Government Finance Act 1992 hereby sets the following amounts as the amounts of Council Tax for the year [2008/09] for each of the categories of dwellings shown below.

Valuation bands

A: B: C: D: E: F: G: H:

Manchester City Council Item 5(b) Executive 11 February 2009 ANNEX 1

Medium Term Financial Plan 2009/10 to 2011/12 And Revenue Budget 2009/10

Purpose of Report

To seek members approval to the Medium Term Financial Plan for 2009/10 to 2011/12 including the approved revenue budget for 2009/10 and indicative revenue budgets for 2010/11 and 2011/12. To inform members of the responses received to the budget consultation process, and to report for approval of members the Prudential Indicators for 2009/10 to 2011/12.

Recommendations

The Executive is recommended to:

1. Note the results of the final RSG settlement for Manchester for 2009/10, the likely settlement figure for 2010/11 and the current planning assumption for 2011/12.

2. Note the outcome of the budget consultation process (summary of responses shown in appendix 6 – a copy of the full responses will be available at the meeting).

5. As part of the Medium Term Financial Plan, specifically approve the following: a. the contingency sum of £9.914m in 2009/10, with indicative sums of £10.449m in 2010/11 and £11.338m in 2011/12 (para. 4.17) b. Departmental Cash Limit Budgets totaling £443.377m for 2009/10 and indicative departmental budgets of £445.199m and £447.426m for 2010/11 and 2011/12 (including growth and efficiencies – appendix 1). c. Corporate Budget requirements to cover the cost of levies and Capital Financing Costs of £92.214m for 2009/10 with indicative sums of £97.904m in 2010/11 and £106.056m for 2011/12 (as outlined in section 4 of this report subject to final notification of Levies from other bodies) d. The utilisation of the Service Improvement Fund (SIF) in 2009/10 to fund part of the costs of the Manchester Improvement team (£2.416m), and the use of SIF resources over the next three years to fund the CRM Manchester City Council Item 5(b) Executive 11 February 2009 development and rollout (£3.989m) and the Customer Strategy (£1.107m) and Information Strategy (£0.745m) as proposed in paragraph 10.9 to 10.10.

7. Note the position on reserves as identified in the report and in Appendix 5 subject to the final call on reserves after any changes are required to account for final levies etc.

11. Approve the target trading surpluses and deficits for the trading services in 2009/10 as outlined in section 13 of the report

12. Approve the Prudential Indicators for 2009/10 to 2011/12 as presented in Appendix 4 subject to any final adjustments that may be made arising from recommendations above.

Manchester City Council Item 5(b) Executive 11 February 2009 1. Introduction

1.1 This document updates the previous version of the Medium Term Financial Plan and shows how the revenue resources of the Council are prioritised to support the strategic objectives of the Manchester Community Strategy and the corporate objectives of the City Council. The Plan is supported by the rolling three year Business Plans and is closely linked to the Capital Strategy and Budget.

The process can be illustrated in the following way:

Manchester Community S trategy

Ward Plans

Corporate

plan

Rolling Three Year Medium term Business Financial Capital Plans Strategy Strategy

Service Asset Corporate AMP Management (property Plans strategy)

Manchester Today

1.2 Manchester is the fastest growing city in the UK after London. Recent years have seen significant improvements in qualify of life, with employment in the city increasing, levels of crime falling, and improvements in education and to the environment.

1.3 Manchester’s economic success is reflected through its population growth and change. The city is becoming more diverse, with an increase in ethnic minority communities, the very young (under five) and the very old (over 80). This diversity enriches the city and also brings new challenges for the delivery and focus of public services, for community cohesion and the wellbeing of all residents and workers. The city still faces many challenges resulting from high levels of deprivation in our communities. Manchester remains the fourth most deprived district in the country. Sixty per cent of our neighbourhoods are included in the ten per cent most deprived in the country.

1.4 These challenges will, over the next few years, be made more difficult due to the general world economic downturn and the impact that this will have on the Manchester City Council Item 5(b) Executive 11 February 2009 citizens we serve, the resources available to the Council and the level of government support we are likely to receive.

The Community Strategy

1.5 The Manchester Partnership (Manchester’s Local Strategic Partnership) is actively tackling the issues that residents say affects their lives. In doing so, the Partnership is delivering Manchester’s Community Strategy and the vision for a world class city by 2015, when Manchester people will live longer, be wealthier and happier.

1.6 The vision will be delivered through the three spines (arrows) illustrated in the diagram above. The spines connect the economic success of the city to improved quality of life for its residents.

1.7 These priorities are reflected in the new Local Area Agreement for Manchester, and the City Council’s Corporate Plan.

The Corporate Plan

1.8 The Council’s Corporate Plan sets out the priorities for Manchester City Council for the period 2007 – 2010. It gives a summary of the actions the Council in taking to improve services to residents, and in doing so, deliver the Community Strategy and the Local Area Agreement. The Corporate Plan Contains 10 Strategy Priorities for the Council:-

Priority 1: Promoting economic development Priority 2: Reaching full potential in education and employment Priority 3: Promoting individual and collective self-esteem – mutual respect Priority 4: Creating Neighbourhoods of Choice Priority 5: Improving Council and community leadership Priority 6: Delivering the Manchester Improvement Programme Manchester City Council Item 5(b) Executive 11 February 2009 Priority 7: Continuously improving the value for money of our services Priority 8: Developing our workforce to deliver high-quality services Priority 9: Ensuring customer and neighbourhood focus, and equality of opportunity in employment and service provision Priority 10: Managing our performance and risks to ensure we deliver our objectives

The Purpose of the Medium Term Financial Strategy

1.9 The vision in the Community Strategy and priorities outlined in the Local Area Agreement and the Council’s Corporate Plan are very ambitious. The Council must therefore ensure that it has the capacity to deliver its ambition and invests is resources in the right areas. This Medium Term Financial Strategy outlines how the Council will invest its financial resources in the coming years to deliver its priorities for service improvement and a better quality of life for Manchester residents.

External Funding Strategy

1.10 External Funding is generally subject to approval through the Business Planning process or (in the case of partnership ABG funding) through the arrangements in place with the Manchester Partnership. The Medium Term Financial Plan as presented below takes account of known external funding. If during the period covered by the MTFP any additional external funding becomes available, or if Heads of Service wish to bid for additional external funding, then details of the proposal will have to be presented to the Revenue Gateway Group through the Revenue Gateway Process for assessment to ensure the proposal is a good strategic fit to the Council’s objectives and that it represents Value for Money for the Council.

2. Background to formulation of the Medium Term Financial Plan

2.1 The budgets put forward within the Medium Term Financial Plan as presented have been formulated as an integral part of the established Business Planning process whereby each Head of Service has produced a detailed three year business plan. These business plans have been developed against a set of cash limit targets set centrally which take as a starting point the 2009/10 and 2010/11 indicative budgets agreed as part of last years business planning and budgeting cycle.

2.2 In order to achieve some headroom within the estimated resources available to meet corporate priorities, Heads of Service were each given an efficiency savings target to achieve. The next section of this report identifies How the total resource envelope has been calculated, how the target efficiency savings have been allocated and the outcome of the business planning process.

2.3 The Budget for 2009/10 and financial plan for the subsequent years has been formulated against the background of economic difficulties. This has been reflected in the proposed budget in a number of ways:

Manchester City Council Item 5(b) Executive 11 February 2009

• reduced income from planning fees, land charges, property rents, • a reduced Council Tax base – evidence of a slow down in the Council Tax base growth over recent months has led to an assumption of a static base over the coming two years, • reduced inflation – there has been a rapid shift in inflationary assumptions which have fed through into assumed levels of pay and price inflation. Fuel costs have seen particularly high levels of increase over the last calendar year but these have shown evidence of slackening over recent months, • increased pressure on services – evidence of increased calls for Council services includes Manchester Advice, Housing and Council Tax benefits, with other areas anticipating seeing greater pressures in coming months • construction prices – some evidence of price reductions but an expectation that these will increase over the coming years • cash flows / financing strategy – twelve month ago short term interest rates were higher than long term rates, whereas now they are expected to move to nearer 0% in the coming months. The Council’s Treasury management Strategy has captured the benefit of this as having no substantial cash investments and actually being in a position to be borrowing temporary funding on a day to day basis at very low costs. This cash position has equally protected the City Council from exposure to bank failures, which has affected a significant number of Council’s across the Country.

3. Resources available based on final settlement

Government Resources 2009/10 to 2011/12

General Grant (RSG)

3.1 The settlement for 2008/9 was the first three year settlement issued by the Government and although the amounts included within the settlement for 2009/10 and 2010/11 were still indicative it was made clear at the time of the settlement announcement that the Government intended not to make changes to these figures.

3.2 When the final settlement for 2009/10 was announced on 21 January, it confirmed that our grant for 2009/10 would remain as previously published and confirmed the indicative 2010/11 figure as the same as the indicative figure issued last year. The figures confirmed were:

2009/10 £336,051,000 2010/11 £342,438,000

3.3 No information has yet been issued on the likely level of grant resources for 2011/12 which will be subject to the next Comprehensive Spending Review This will indicate the settlement figures for 2011/12 and provide indicative figures for the next 2 years. Local Government is expected to make the same Manchester City Council Item 5(b) Executive 11 February 2009 3% annual efficiency improvements as the rest of the public sector and it has been assumed this requirement will continue into 2011/12.

3.4 Due to lack of certainty in advance of the next CSR, an assumption has had to be made on the likely level of resources that will be made available in 2011/12. Based on current assessment of the economic climate going forward, the current recession may not have run its course by the start of 2011/12 and given the level of national borrowing the Exchequers position will be constrained. It is a reasonable assumption that the overall level of resources available to fund local government through the next CSR round will be constrained. The current settlement for Manchester, however, is underestimating the growth in Manchester’s population and over stating the assumed Council Tax base and although representations on these issues have been made to the DCLG, no changes can be expected before the next three year round starting in 2011/12 at which point the data should be updated and the Council might receive some uplift compared to the settlement generally.

3.5 On this basis, the City Treasurer feels that a 2% growth in grant received is not unrealistic and this is what has been assumed within the MTFP. Our developing strategy going forward demands a responsive and flexible approach to significant changes being made to Local Government settlements for 2011/12 and beyond.

Housing Market Renewal Grant

3.6 The City Council accesses Housing Market Renewal (HMR) funding via the Manchester Salford Pathfinder. The Pathfinder has an indicative allocation of £140m of HMR for financial years 2008/09 - 2010/11 (confirmation of actual amounts for 2009/10 and 2010/11 will be received from government in February / March 2009 and 2010 respectively). Whilst predominantly a capital grant that is used to acquire and demolish obsolete stock, improve retained stock and undertake public realm and environmental improvements in targeted neighbourhoods, HMR does also support a limited amount of revenue expenditure. In recent years revenue activity has focused on funding the Private Rented Sector and Anti Social Behaviour / Mediation Teams within the Housing Department. HMR Grant rules also allow that staff costs relating to the delivery and management of the HMR capital works can be capitalised and funded through the grant. There is no guarantee that the HMR programme will continue beyond 2010/11 and any decisions on its future will be made by Government as part of the next Comprehensive Spending Review. At best, the level of HMR grant made available is likely to significantly diminish in size and it may cease altogether. As a result some of the currently funded activity will need to be picked up on revenue. Provision has been made in the budgets identified later in this report for additional mainstream support to cover some of the on-going activity currently funded through the HMR.

Manchester City Council Item 5(b) Executive 11 February 2009 Dedicated Schools Grant

3.7 The Dedicated Schools Grant (DSG), introduced in 2006/07, pays for much of the costs of schools and pupil based education services. The grant received in 2008/09 was £281.132m. Based on the October 2008 pupil and school census data, adjusted for anticipated January intake, it is estimated that the DSG will total £289.4m in 2009/10. However, this is only an estimate and the January 2009 census data, on which the final allocation is based, will provide a more accurate picture of likely funding for the coming year. The final DSG grant payable to the Authority will not be confirmed by the Department for Children, Schools and Families (DCSF) until May/June 2009 when the data has been cleansed nationally and pupil duplications removed.

Area based Grants (including Working Neighbourhoods Fund)

3.8 Many of the specific grants that the Council used to receive have now been rolled into one grant, The Area Based Grant (ABG). This includes the Working Neighbourhoods Fund (WNF) which replaced the Neighbourhood Renewal Fund (NRF). The ABG is a non-ringfenced grant and it is at the discretion of the City Council how the grant is spent. A significant proportion of the grant (mainly but not exclusively the WNF) however, is spent in conjunction with the Manchester Partnership.

3.9 Under the accounting rules for the ABG the grant has to be accounted for in a similar way to RSG, i.e. expenditure met from the grant should be accounted for gross and the grant should not be netted off service expenditure as is the case with specific grants. This has meant that where ABG funds mainstream activity, the cost of that activity is added to service’s cash limit budgets. Like RSG the level of ABG the Council will receive has been announced for 2009/10 (£96.118m) and 2010/11 (£94.506m). Year 3 grant has not been announced but for planning purposes it has been assumed that the grant will be at the same cash level as in 2010/11.

3.10 Of the grant receivable in 2009/10 (£96.118m) some £62.271m relates to mainstream expenditure and this amount has been allocated to appropriate services to meet on-going commitments. The balance of £33.847 supports partnership activities to support delivery of the LAA. More detail on the allocation and utilisation of the ABG is included later in this report (paragraphs 4.9 to 4.12).

Other Resources

Council Tax:

3.11 The budget for 2008/9 included budgeted Council Tax receipts of £132.384m from a tax base of 118,844 band D equivalent properties (assuming a 98% collection rate). The Council has been experiencing steady growth in the tax base and the current tax base exceeds that used in the 2008/9 budget. It is therefore expected that the tax base for 2009/10 will be 121,127 which is 1.9% Manchester City Council Item 5(b) Executive 11 February 2009 above the 2008/9 figure. Based on trends for the last few months, a prudent view of nil growth in the tax base has, however, been taken for 20010/11 and 2011/12. The Collection Fund is expected to be in surplus at the end of 2008/9 and this is built into the resource projection for 2009/10.

3.12 The level of inflation is now starting to drop significantly and is expected not to pick up again for some years and the Government has issued warnings that it expects Councils to keep increases over the next few years to low single figures. For the purposes of planning it has been assumed that the Council Tax for Manchester will increase by 3% in 2009/10 and 2% in 2010/11 and 2011/12. These increases are for Manchester’s Council Tax and do not include any provision for growth in the Police and Fire precepts which are levied separately.

3.13 On these planning assumptions, the Council Tax available to the Council to fund services over the next three years will be:

2009/10 £138.875m 2010/11 £140.612m 2011/12 £143.405m

3.14 The level of Council Tax set for 2009/10 will be determined by Council in March and the Council Tax increases for 2010/11 and 2011/12 will be subject to review in future budget rounds. For information, each plus or minus 1% change in the Council Tax (based on the assumed tax base of 121,127 band D properties) would change the amount of Council Tax collected by plus or minus £1.3m

Dividends:

3.15 The City Council receives dividends from the airport and the parking joint venture company. Airport dividends, when received, are placed in a reserve and then a proportion of the reserve is released in the following year to support the revenue budget. This is considered to be a prudent mechanism which gives the Council some protection if anticipated dividend levels are not achieved. The estimated figures to be utilised in support of the budget are:

2009/10 2010/11 2011/12 £’000 £’000 £’000 Airport 3,870 4,040 4,210 Parking Joint Venture 1,500 1,500 1,500 Total 5,370 5,540 5,710

Airport dividends not required to support the Revenue Budget are transferred into the Capital Fund.

Manchester City Council Item 5(b) Executive 11 February 2009 Trading Reserves:

3.16 The targets set for the trading services in 2008/9 were to make an overall loss due mainly to the interim affects of the transfer of City Works to Manchester Working leaving a short term trading pressure pending the eventual wind down. Targets have been revised in year to show a small overall surplus year (due to the impact on these services of some of the corporate procurement savings). With the final transfer of City Works business through the Housing Options Programme being planned to complete in March 09 , it is anticipated that the remaining trading businesses within Neighbourhood Services of Manchester Contracts , Street Scene Services and Furniture Stores/Tenants Decorating will all make small surpluses to offset the loss from Catering which is impacted by reduced meal days, MEDC is also assumed to be able to make a small surplus. There is a risk however that residual city works costs will continue to impact on the plan and cause a business loss. Further details of the trading services are contained in section 13 of the report. Despite there being an expectation that surpluses will be achieved this year and next year, the Treasurer considers that there is too high a risk factor to the surpluses being achieved to confidently assume any contribution to the revenue budget from this source.

Parking Reserve and Bus Lane Enforcement Reserve:

3.17 In 2008/9 it is estimated that a sum of £1.869m will be paid into the Parking reserve from the surplus from on street parking. In accordance with statute, this sum has to fall into the parking reserve and subject to there being no requirement to fund any further off street parking, this reserve is available to fund certain types of expenditure. Some £2.437m will be utilised from the reserve in 2008/9 to fund environmental improvements and transport related projects in line with the budget approval for 2008/9. This means that the balance on the reserve at 31 March 2009 is expected to be £1.897m.

3.18 For the last few years, the level of income going into the reserve has been less than the amounts taken from the reserve to support environmental improvements. This was done to run down the level of the reserve to a reasonable level. Going forward, income into the reserve may be adversely affected by the impact of the current downturn in the economy and as such the calls on the reserve for the next three years have been reduced to a level more consistent with anticipated income.

3.19 Income receivable through Bus Lane Enforcement action is transferred into a reserve similar to the Parking Reserve. The reserve will have an estimated balance at 31 March 2009 of £583,000 and income in 2009/10 is expected to be around £200,000 leaving a balance at the 31 March 2010 of £783,000. There are currently no proposals to utilise this reserve. There are restrictions also similar to the parking reserve on what these monies can be used for.

3.20 Officers advise that, as there is no foreseen requirement in the next three years to provide additional off street parking, and no requirement for financial Manchester City Council Item 5(b) Executive 11 February 2009 support to existing off street parking, the following items be funded from the reserve:

2009/10 2010/11 2011/12 - support for Metro shuttle 345 353 361 - highway and environmental improvements 1,750 1,500 1,500 Total calls on reserve 2,095 1,853 1,861

3.21 The Executive is asked to agree to this proposal, subject to annual review as part of the budget process to ensure that the surplus income from parking is sufficient to sustain this level of expenditure. Based on existing estimates there will be sufficient in the reserve to meet these costs over the next three years.

Other Resources

3.22 Manchester Working make a contribution each year to cover potential additional pension liabilities arising from the staff transferred from the City. This is not required to supplement the existing pension reserve and so can be utilised to support the budget generally. The amounts receivable over the next three years are estimated as:

2009/10 £450,000 2010/11 £400,000 2011/12 £350,000

Total all Resources:

3.23 Based on all the above, the level of resources available to support the Council’s revenue budget over the next three years compared to 2007/8 can be summarised as:

2009/10 2010/11 2011/12 £’000 £’000 £’000 Government Support 336,051 342,438 349,286 Council Tax receipts 138,875 140,612 143,405 Area Based Grant 96,118 94,506 94,506 Dividends 5,370 5,540 5,710 Parking Reserves 2,095 1,853 1,861 Other Resources 450 400 350 Total Resources 578,959 585,349 595,118

3.24 The Council Tax receipts figures shown above assume a 3% increase in the Council Tax for Manchester in 2009/10 and a further 2% in the next two years.

Manchester City Council Item 5(b) Executive 11 February 2009 4. Calls against Resources

Departmental Requirements:

4.1 For this years budget process the budget has been prepared using the following principles:

• Business Plans are Improvement Plans – they should show how all of our functions are being improved to deliver the Community Strategy • Business plans show how improvement will be implemented - should show how people, performance, finance and risk will be managed in an integrated way over the next three years to implement the agreed improvements • We move resources to corporate priorities - The budget and business planning process should move resources to our priorities not simply allow spending to be pushed by seemingly unavoidable cost pressures. • We also move resources to neighbourhood priorities through the Neighbourhood Funding strategy • To invest in corporate and neighbourhood priorities we have to identify efficiencies to release the resources needed • We find efficiencies without impacting on the quality of service received by residents and customers, that is, we look to do the same for less resource or doing more with the same resource. • The budget balances over the three year period • We have an integrated process – it integrates mainstream funding with additional funding through ABG and SIF

4.2 Heads of Service have reviewed their Business Plans and rolled them forward for a further year to cover the three years 2009/10 to 2011/12 using the above principles.

4.3 The cash limit budget targets were based on the following assumptions:

• That pay awards for all staff will be 2.5% a year • National Insurance rates will remain unchanged (although provision has been made in contingency for the announced increase in 2011/12) • No increase in Pension Rates (but see item in contingency in paragraph 3.4 below) • General (non pay) inflation figure of 2% a year • Any growth approved last year as part of the MTFP would be made available.

4.4 Since these targets were issued, the economic downturn has significantly impacted on inflation rates and the City Treasurer has revised the assumptions as follows:

• Pay inflation will be 2% a year • The allowance for general non pay inflation can be reduced by £1m.

Manchester City Council Item 5(b) Executive 11 February 2009 Negative amounts to cover these reductions are being held in contingency and will be allocated to Cash Limit Budgets for services based upon indices of inflation in major areas of spend.

4.5 In addition, departments were set targets to achieve further efficiency savings. These targets were calculated on the following basis:

• Any efficiency savings identified in last years MTFP for 2009/10 and 2010/11, plus: o For services that were subject to priority MIP SIP’s the savings identified as achievable as assessed by MIP and agreed with project sponsors, or o For services not subject to priority MIP SIP’s an allocation of the balance of MIP savings not allocated to individual services as above. • For 2011/12 an efficiency target of 3% of net cash limit was set for all services

4.6 In addition to the savings identified by Heads of Service, it is also anticipated that corporate procurement will achieve savings across services of £1.5m each year and that further savings will be achieved from the purchase card discounts and the implementation of the new printing arrangements. A group of senior officers have also been tasked with identifying a range of housekeeping efficiencies which it is anticipated will save around £0.5m in 2009/10 rising to over a £1m in subsequent years.

4.7 Achieving savings at this level will enable investment in key council services and priorities. In the main Heads of Service have identified savings in line with the targets set. Further details of proposed savings are attached as Appendix B.

4.8 After taking into account the all the above, including the efficiency savings identified, the net call on resources arising from business plans is:

2009/10 £427.474m 2010/11 £422.092m 2011/12 £418.253m

Partnership Funding (ABG Grant):

4.9 Those five elements of ABG used in conjunction with partnerships (Deprived Area Fund, Safer Stronger Communities Fund, Teenage Pregnancy, Preventing Violent Extremism and Working Neighbourhoods Fund) will remain within the governance / delivery structure of the Manchester Partnership. The grant totals £33.389m for 2009/10, which includes growth of £1.922m. Their use will be specifically targeted at the Thematic targets within the Local Area Agreement (LAA). Until there is a stronger process in place for aligning resources between partners, these funds are a critical aspect of driving forward service improvement and delivery of LAA targets across the public sector.

Manchester City Council Item 5(b) Executive 11 February 2009 4.10 Grant allocations to partnerships in 2008/09 included one-off funding of £2m from the Council to take the thematic partnerships through the transitional year. This funding has now ended and Partnerships will deliver efficiencies of 7.2% to align their spend accordingly.

4.11 The Manchester Partnership Resources and Performance Sub Group will be making recommendations on how the £1.922m increase in funding should be allocated to promote public service innovation. One-off outcome based work to hep reduce the gap between average resident wage and average workplace wage compared to core cities will be prioritised.

4.12 Partnership funding for 2010/11 will reduce to £31.363m as the overall level of ABG grant reduces. No announcement has yet been made on ABG funding that will be available in 2011/12. For now an assumption of a cash freeze on partnership funding has been made in line with the assumption made on ABG resource generally.

Levies:

4.13 The Council is responsible for paying a number of levies to other joint bodies, most notably the Greater Manchester Waste Authority and the Greater Manchester Passenger Transport Authority. Estimates have been included for levies as follows:

2009/10 2010/11 2011/12 £’000 £’000 £’000 GM Passenger Transport 29,452 31,072 32,781 GM Waste Disposal Levy 19,585 21,020 24,279 Environment Agency 187 194 202 Probation 30 30 30 Magistrates Court 21 21 21 Port Health Authority 72 74 76 Total 49,347 52,411 57,389

* Although included within the table of levies above, t he waste levy is now being administered by Environmental Services and will be included within their published budget. This is to recognise the impact that the actions of the department in reducing the levels of waste delivered to the WDA will have on the level of future levies which will be tonnage based. It has been included above to give a complete view of the levies paid.

4.14 The PTA levy is distributed across the districts based on population. The above figures allow for the impact of Manchester’s population growing as well as the proposed increase in the total levy to the PTA.

4.15 The WDA Levy takes into account the impact on the levy of a move towards a distribution based purely on the level of waste disposed of and the anticipated Manchester City Council Item 5(b) Executive 11 February 2009 impact of the new waste disposal PFI which is nearing implementation. The PFI is expected to have a significant impact on the levy in year 3

4.16 Final levies for 2009/10 are not yet known but are not expected to differ significantly from the current estimates.

Contingency:

4.17 The contingency is used to hold monies to meet unforeseen costs that may arise during the year, to hold budgets for known issues that have not yet been allocated to departmental budgets or to hold budgets for known issues where the final cost of the council is not yet clear. The required contingency amounts for the next three are currently estimated as:

2009/10 £9.914m 2010/11 £10.449m 2011/12 £11.338m

4.18 Contained within the above figures are the proposed reductions to inflation allowances as described in paragraph 4.4 above pending allocation by the City Treasurer. These are negative amounts of £2.150m in 2009/10, £3.331m in 2010/11 and £4.458m in 2011/12.

Capital Financing Costs:

4.19 Capital financing costs have been calculated based on the assumptions on unsupported borrowing included within the Capital Programme (contained as Annex 2 to this report). Any agreed changes to the Capital Programme as presented that affect the proposed level of unsupported borrowing could have an impact on the estimated Capital Financing Costs requirement. The figures for Capital Financing costs included in the MTFP include the estimated costs arising from the proposed refurbishment of the Town Hall complex which is covered in a detailed report elsewhere on this agenda. The figures below show the total budget required assuming the Town Hall project goes ahead (the amounts relating to the Town Hall project are shown in brackets:

2009/10 £42.867m (£311,000) 2010/11 £45.493m (£1,219,000) 2011/12 £48.667m (£2,516,000)

4.20 The prudential code allows unsupported borrowing provided the authority can demonstrate through the Prudential Indicators that it can afford such borrowing from within projected revenue streams. Proposed Prudential Indicators based on the current budget reports are attached as appendix 4.

5. Summary of initial budget position

5.1 The current estimated budget position of the Council over the next three years taking into account all of the above can be summarised as: Manchester City Council Item 5(b) Executive 11 February 2009

2009/10 2010/11 2011/12 £’000 £’000 £’000 Resources : Government Support 336,051 342,438 349,286 Council Tax receipts 138,875 140,612 143,405 Area Based Grant 96,118 94,506 94,506 Dividends 5,370 5,540 5,710 Parking Reserves 2,095 1,853 1,861 Other Resources 450 400 350 Total Resources 578,959 585,349 595,118 Calls on resources : Departmental Requirements 427,474 422,092 418,253 Corporate Requirements: Levies 49,347 52,411 57,389 Capital Financing Costs 42,867 45,493 48,667 Contingency 9,914 10,449 11,338 Partnership Funding 33,839 31,363 31,363 Total Call on resources 563,441 561,808 567,010 Surplus of Resources 15,518 23,541 28,108

5.2 Within the above, the figures used for levies in 2009/10 are still subject to final approval and announcement. All the figures contained above for 2010/11 and 2011/12 are based on the best available information at this time and should be treated as indicative only to aid medium term financial planning. All could be subject to change.

5.3 It can be seen from the above that efficiency savings in business plans and corporately has enabled the Council to direct its resources into priority areas. Priorities for the MTFP which directly support the delivery of the Community Strategy as Corporate Priorities are as follows:

Major corporate priorities Waste and Recycling Reflecting and managing the impact of the economic downturn Children’s and Youth Services Climate change /sustainability

Other corporate priorities • Street Scene • Events • Libraries • Neighbourhood Funding Strategy • Infrastructure to Improve Services • Town Hall

(Specific provision for Climate Change / sustainability and Events was made in last years budget)

Manchester City Council Item 5(b) Executive 11 February 2009 6. Proposals for Additional Investment

Proposals for investment in corporate priorities have been identified as follows:

Waste and Recycling

6.1 Budget provision has been made for the Waste Strategy approved by members following the extensive public consultation in 2008. Briefly the service will be enhanced to increase the recycling rate to over 36% by 10/11 from it's current level of around 22%. This will be achieved by introducing kerbside collection services for paper, cardboard, drinks cartons, glass, plastic bottles, cans, food, clothing, textiles and shoes for all residents. In addition the green recycling garden service will be extended to include all resident with gardens. Members will recall that £1m was provided in last years Medium Term Review and a further ongoing revenue budget of £3.4m by 10/11 has been provided to fund this service in this years plan . Financially this level of investment is justified in order to avoid Landfill Allowance Trading Scheme penalties that could be as high as £5.5m by 10/11 and increase significantly in future years.

Impact of the Economic Downturn

6.2 the economic downturn is having a significant impact on a number of income streams of the council, most notably, Land Charge Income budgets in legal, Development Control income budgets in Transport and Engineering and Planning Application and Building Control income budgets in Planning. It is estimated that these budgets could currently be overstated by almost £1.5m in total.

Children’s and Youth Services :

Fostering and Family Placement

6.3 For a number of years, funding for Manchester’s Fostering Service has not been sufficient to meet the rising demand for placements. High caseloads for staff had led to a risk of not meeting statutory requirements. An initial investment of £300k has already been made in order to ensure the Council achieved a judgement of satisfactory in its recent OfSTED inspection. Further improvements are now required but cannot be made without significant investment. A baseline investment of £1m is required to support service improvement to ensure that greater support is provided to the current number of carers and deliver improvements and efficiencies across the service. This will contribute to the safeguarding of Manchester children.

Transforming Social Work

6.4 In accordance with the three year Business Plan (2009-12) it is projected that the number of social workers required will peak during the course of the first Manchester City Council Item 5(b) Executive 11 February 2009 and second years. Up front investment in additional social worker capacity is anticipated to have a positive effect over a period of time.

6.5 With additional social work and management capacity it is envisaged that related targets can be exceeded, therefore reducing the number of looked after children, which in turn would mean a further reduction in the number of social workers needed in future years. The additional investment proposed will fundamentally change the nature of the work of district based social workers, building capacity, improving efficiency and ultimately making a significant contribution to ensuring the most vulnerable of our children reach their full potential and can contribute and benefit from the future success of the city.

Extended schools

6.6 Funding is required for the continuation of the Extended Schools programme, funding through ABG as a result of re-routing resources previously included in the Early Years and Childcare Grant 2002-2008. Funding is provided to support schools, by providing access to a core set of extended services, in raising standards of pupil motivation, aspiration, achievement and behaviour and contributing to a wide range of other activities including childcare, community cohesion, neighbourhood renewal, adult learning, combating child poverty, health inequalities and crime reduction.

Funding for Academies programme

6.7 It is a requirement of the DCSF funding for the academies programme that the City Council underwrites a sum of £40,000 per annum, per Academy. Two Academies will open in September 2009, and four in September 2010.

Extended Positive Activities for Young People

6.8 In Aiming High for Young People: a Ten Year Strategy for Positive Activities, the Government announced significant further investment between 2008- 2011, expanding the availability of year-round highly personalised provision for the most disengaged young people. The further investment in positive activities will enable the Council to support the increased provision during school holidays for more vulnerable teenagers, including those at the highest risk of social exclusion, and also extend the supply of tailored packages of activities across the year, including term time.

Services for 14-19s

6.9 The 14-19 service has been reviewed in order to assess the structure which is required to meet the increasing demands for young people, which include diplomas, apprenticeships, work related learning, sixth form provision and training opportunities. Investment of £200k is proposed to improve capacity within the service and for it to be prepared for assuming additional powers in 2010 following transfer of Learning and Skills Council functions to the Council.

Manchester City Council Item 5(b) Executive 11 February 2009 Joint Commissioning Officer

6.10 Manchester Health have indicated their commitment to fund 50% of a Joint Commissioning Officer post. Without match funding from Children’s Services, the appointment may not be feasible. The appointment would provide an excellent opportunity for joint commissioning arrangements between the Council and children’s trust partners, particularly NHS Manchester.

Home to school transport

6.11 There is a statutory requirement to extend free transport to school reducing the threshold from 3 miles to 2 miles. This will support children from deprived areas, so that children from low income families travelling longer distance to and from school can do so at no extra cost.

Other Corporate Priorities :

Neighbourhood Funding Strategy

6.12 The Neighbourhood Funding Strategy enables Ward Councillors to identify proposals for how council resources can be used more effectively to meet the priorities for neighbourhoods in the wards they represent. The objectives are to:

• To support the ward representative role of councillors to influence the whole of budgets through ward co-ordination • To enable neighbourhood priorities to be reflected in mainstream budgets and business planning

6.13 This is not simply about individual proposals from ward councillors being funded but for Heads of Service to use this feedback from neighbourhood level to inform their strategic planning and assist in levering funding from partners to meet key priorities. It forms one part of the analysis that drives the overall improvement strategy for the service, assists with levering funding from partners to meet key priorities and is set out in the business plan.

6.14 The proposals put forward by Ward Councillors have focused primarily on Environmental Services, Leisure, Highways and Engineering and Youth provision. Most proposals are being dealt with within existing resources during the current year or have been included within draft business plans to be implemented over the coming three year period, again from within existing resources.

6.15 There are some proposals, particularly relating to environmental services and engineering and highways services, which will require additional funding to be implemented. £1m of additional revenue and £3m of capital funding has been allocated to support the development of neighbourhood priorities. Use of this funding will be approved through the Council’s Gateway processes.

Manchester City Council Item 5(b) Executive 11 February 2009 Culture and Events

6.16 Cultural activity is recognised though the Cultural Strategy as a key aspect of developing the engagement and participation of residents in regeneration activity, both in terms of development of Neighbourhoods of Choice and in maximising the willingness and ability of residents to engage in City Centre opportunities. The establishment of an additional Cultural Regeneration Officer for the City South would ensure that there is support for the delivery of cultural activity across the whole city. Additional funding is also proposed for the Halle Orchestra and to support the 2009 Manchester International Festival.

Visual Environment Improvements

6.17 Service Improvement Funding has provided additional resources over the last few years to provide dedicated staff to the areas of dedicated fly-posting, graffiti, dog fouling and street washing / gum removal services, delivering a faster service response than if left to mainstream services. These are seen as key services and replacement mainstream funding of £575,000 is to be made available.

Improvements to Library Services

6.18 Significant progress has been made over the last four years to obtain investment to refurbish and relocate the library building portfolio. Customers increasingly expect modern, vibrant and attractive buildings, located at the heard of community hubs, which deliver considerably more than the ‘traditional’ library offer. Libraries are access points for a range of council services, they are learning centres and information points and ICT provision is expected as a fundamental part of the service.

6.19 Capital funding has been secured for a number of library improvement schemes, including New Miles Platting, Brookway and Beswick Academies and High Blackley libraries. However, additional investment is required for staffing these new facilities and to support extended and Sunday opening across all districts. The introduction of self issue technology (RFID) will meet the growing customer demand for easier and more convenient access to services provided by the Library service, releasing staff resources enabling us to provide a more customer centred service and additional staff training and development leading to more concrete and community based information service provision.

Other Key priorities :

Realignment of Regeneration Budgets

6.20 A review of Regeneration Division budgets has identified a reliance on external funding sources to deliver regeneration service, and a shortfall in mainstream provision related to staffing costs in respect of a number of key posts. Additional mainstream funding is now required to ensure that the resources are in place to strategically manage and oversee the work core Manchester City Council Item 5(b) Executive 11 February 2009 work of the division, to drive, facilitate and enable the continued growth of the City, and to continue to stimulate the regeneration of the city’s neighbourhoods.

Housing

6.21 The reduction in Housing Market Renewal Grant will lead to a reduction in support to the revenue budget and the ability to capitalise salaries across Private Sector Housing and Anti-Social Behaviour Action Team.

Transport and Engineering Services

6.22 Additional funding is required to cover an increased in the volume of work involved in responding to residents’ and businesses’ requests for traffic and engineering services. The Highways Service improvement project, which will introduce SAP / CRM customer services and a significantly revised staffing structure, will improve efficiency and productivity. Improved delivery of the service will make a significant contribution to the development of a well maintained and managed highway infrastructure which is essential to the economic growth of the City and development of local business opportunities.

6.23 Whilst actions taken in recent years have been successful in reducing the number of trip claims against the Council, where a trip claim is upheld the level of compensation awarded to claimants has increased significantly putting pressure on this budget.

6.24 There has been a significant increase in the energy demand of street lighting as new, brighter columns are installed through the PFI. This is leading to ongoing pressure on the street lighting energy budget.

Adult Services

6.25 By 2011/12 it is anticipated that demographic pressures will have a significant impact on the volume and complexity of the needs of Adult Social Care clients. Demand for dementia services is expected to grow significantly due to an aging population, and the number of adults requiring mental health services will also rise. Increased expenditure in Adult Social care will enable the Council to fulfil the statutory duty of providing social care services for all those that are eligible. This will allow us to respond to increased demand for carers, equipment and adaptations, care home and supported accommodation, individual budgets as well as deliver improved mental health services.

6.26 Additional expenditure in Adult Social Care will also enable the service to adopt a locality working model, which will improve customer and neighbourhood focus.

Bereavement Services re-erection of laid down memorial stones

6.27 Funding is proposed to secure resource to re-erect over 4,000 privately owned memorial headstones in the Council’s five cemeteries that were laid down a Manchester City Council Item 5(b) Executive 11 February 2009 number of years ago because they had become unstable and presented a health and safety risk to the public. This project will make a significant improvement o the visual appearance of the cities cemeteries and contribute to providing a cemetery infrastructure within local neighbourhoods that is safe, accessible and cared for.

Environmental Campaigns

6.28 A range of campaigns and projects are planned to stimulate and measure improvements in awareness and increased participation in environmental initiatives, improved environmental performance and rising levels of satisfaction in services provided. Funding is proposed for the 100 days campaign, based around community engagement, with collective and intergeneration activity bringing together diverse groups increasing community pride and mutual respect to replace the contribution previously made by the SIF.

Infrastructure to Improve Services

Web development programme

6.29 The web development programme is required in order to deliver key components of the Customer Services Strategy and associated business plans. The key deliverable is being able to provide the Council’s customers with a comprehensive online self service – giving them the ability to log onto their own account to make enquires, requests and track progress of any existing requests as well as having access to forms and making transactions online.

6.30 To deliver this capability, the Council’s website needs to interact and interface with a host of legacy Council IT systems and databases, and feed into a Customer relationship Management System. All future web developments will be aligned to the delivery of the Customer Services Strategy and information Strategy.

Customer and Information Strategies

6.31 These two key strategies will be funded through SIF (see para. 10.10 below).

Energy costs

6.32 The impact of significant increases in the cost of gas and electricity have been absorbed within the larger departments however these increases have a disproportionate impact on the smaller departments who are responsible for running buildings. Energy prices are starting to show signs of reduction and corporate procurement will be looking to make reductions in costs when current contracts are up for renewal. There will, however, be a need to increase the budgets for these costs for smaller departments where energy is a disproportionate share of their spend if the increased costs of fuel are not have an adverse impact on their budgets and lead to budget pressures that Manchester City Council Item 5(b) Executive 11 February 2009 cannot be contained within their overall budgets. It is anticipated that £300,000 will be required across the smaller services.

6.33 A summary of all recommended growth bids is attached as appendix 3.

6.34 The proposed growth bids represent a cross section of council priorities. There is a contribution to sustainable economic growth through increased budgets to improve the highways infrastructure; contributions to enabling people to reach their full potential through the investment in libraries and additional growth in both Children’s and Adult services budgets; a contribution to creating neighbourhoods of choice through the Neighbourhood Funding Strategy; and a contribution to our green city agenda through the investments in recycling. There is also a general support to service budgets by meeting the identified impacts of the economic downturn which will help avoid budget pressures arising.

6.35 The list of growth bids has had an initial assessment through the revenue gateway process by the gateway board. Members are asked to endorse the principal that any new monies approved as part of the budget process are not released to service budgets until approval through the gateway process has been obtained.

7. Summary of Final financial Position

7.1 If all growth bids are approved, the cumulative call against the surplus resources identified would be:

2009/10 £15.903m 2010/11 £23.107m 2011/12 £29.173m

7.2 This would leave the following bottom line position:

2009/10 Shortfall of £385,000 2010/11 Surplus of £434,000 2011/12 Shortfall of £1,065,000

7.3 It can be seen from the above that assuming all growth bids and proposed efficiency savings are approved, there is an overall shortfall of resources over the three years of the MTFS of £790,000 which if not for the shortfall in year 3 of the plan would be a small surplus of £185,000. It is therefore proposed that the General Fund reserve be used to balance the budget over the three years of the MTFP. The calls and anticipated balance on the General Fund is considered in more detail below.

7.4 The table below summarises the proposals for the Medium Term Financial Plan as discussed above:

Manchester City Council Item 5(b) Executive 11 February 2009 2009/10 2010/11 2011/12 £’000 £’000 £’000 Resources : Government Support 336,051 342,438 349,286 Council Tax receipts 138,875 140,612 143,405 Area Based Grant 96,118 94,506 94,506 Dividends 5,370 5,540 5,710 Parking Reserves 2,095 1,853 1,861 Other Resources 450 400 350 Total Resources 578,959 585,349 595,118 Calls on resources : Departmental Requirements 443,377 445,199 447,426 Corporate Requirements: Levies 49,347 52,411 57,389 Capital Financing Costs 42,867 45,493 48,667 Contingency 9,914 10,449 11,338 Partnership Funding 33,839 31,363 31,363 Total Call on resources 579,344 584,915 596,183

Net contribution from / (to) GF Reserve 385 (434) 1,065

8. Local Authority Business Growth Incentive scheme (LABGI)

8.1 LABGI was originally introduced to cover a three year period covering 2005/6, 2006/7 and 2007/8. During that time Manchester has received a total of £31.2m. Some £100m of the amount originally earmarked for LABGI by the Government has been held back from distribution pending the outcome a judicial review. Recently the Government announced that it was about to release the majority of this amount, but details are still awaited.

8.2 In the last spending review it was announced that a new LABGI scheme would be put in place starting in 2009/10 but this would be substantially smaller with only £50m being set aside in 2009/10 and £100m in 2010/11 nationally. This compared to the £1,000m over the three years of the first LABGI scheme. The Government are still in the process of consulting on how the new scheme might work, based on the consultation we have estimated that Manchester could receive around £500,000 to £900,000 in 2009/10 and between £1m and £1.8m in 2010/11, however, these figures are purely estimates based on the consultation paper.

9. Robustness of the estimates

9.1 Under S25 of the Local Government Act 2003 the Treasurer has to report to the Council on the robustness of the estimates and the adequacy of reserves.

9.2 The City Treasurer has examined the major assumptions used within the budget calculations and considers that they are prudent based on the best information we have available. Each Service Head has carried out an individual risk assessment of their own budgets which have been reviewed by Manchester City Council Item 5(b) Executive 11 February 2009 the Corporate Support Team as part of the business planning process. In addition, the Treasurer has carried out a corporate budget risk assessment and will implement actions to mitigate risks identified. It is considered that the efficiency savings targets put forward by Heads of Service within their business plans represent a high risk and will required the full commitment of strategic directors, heads of service and other council staff to ensure that they are achieved. The achievement of these savings will be monitored by Strategic Management Team on a monthly basis throughout the coming year.

9.3 It is the opinion of the City Treasurer that any significant budget risks to the General Fund and the Housing Revenue Account reported elsewhere on the agenda have been identified and that suitable proposals have been put in place to mitigate against these risks where possible. The Council’s Budget Monitoring procedures, are now well embedded and are designed to specifically monitor high level risks and volatile budgets.

9.4 The level of the contingency provision and General Fund Reserves held is considered sufficient to meet the costs of risks should they materialise.

10. Financial Reserves

10.1 The Council has a number of reserves which it holds for a variety of purposes but they fall into two main types:

Specific reserves – these are held for specific purposes and have limits on what the reserve can be used for and who can authorise additions to / use of them

General Reserves – These are reserves that are not held for specific purposes and can be utilised by the council for any legitimate purpose.

10.2 It is a requirement of the Local Government Act 2003 that, as part of the budget setting process, members receive details of the specific reserves held including the balances held, proposed additions or utilisation, and the purpose of the reserve. In addition the City Treasurer needs to give formal consideration to the adequacy of the Council’s general reserves and report this to members.

10.3 Details of the reserves held by the Council have been included as Appendix 5 to this report. A review of specific reserves has been carried out and a number of small reserves previously set up are deemed to be non longer necessary. The balances held on these reserves have been transferred into the General Fund Reserve.

General Fund Reserve

10.4 this reserve is held to meet exceptional, unplanned, unforeseen expenditure during the financial year and after the budget is set. The General Reserve has historically been maintained in recent years at a level of around £20m. The actual level of the reserve as at 31/3/08 was £27.6m and whilst this is high Manchester City Council Item 5(b) Executive 11 February 2009 compared to most Council’s, the growing levels of efficiency savings assumed within budgets coupled with the levels of other financial risks within the Council’s activities it is felt that this level more accurately reflects the level of reserve currently required. The transfer of the specific reserves no longer required (see paragraph above) will add £545k to this balance.

10.5 Within the current year it has been agreed that some £1.7m of the reserve will be required to meet costs associated with Manchester Care and the budget agreed for 2008/9 assumed that £6.772m would be used to support the budget. It is currently estimated that there will be around £3m of unused contingency in the current year that will fall into the reserve and we are expecting some £900,000 to fall into the reserve from a rebate on the WDA levy from further delays in implementing the PFI project. These items, along with a potential £500,000 underspend on departmental and corporate budgets falling into the reserve means that the balance on the reserve at 31/3/09 is currently estimated to be around £23m.

10.6 Apart form the proposed call on the reserve next year as identified by the MTFP of £385,000, there are no further planned calls on the reserve next year.

10.7 A risk based analysis of the level of reserves has been carried out which has identified that reserves at this level are sufficient to cover the inherent risks in the Council’s activity and are considered by the Treasurer to be prudent at this time given the uncertainties over the level of funding that the Council will receive after 2010/11 and the on-going impact of the downturn in the economy.

Housing Revenue Account Reserves

10.8 The HRA Reserve comprises three components. The general reserve reflects the cumulative effect of year on year differences between income and expenditure associated with providing the housing service. The earmarked general reserve holds compensation payments received in previous years in respect of the M60 and are being used to fund a number of specific projects. There is also a PFI reserve which is being built up to meet future commitments in respect of a number of PFI. schemes both in existence and also in the planning stage. Further details of the sums held on these reserves are shown in Appendix 5.

Service Improvement Fund (SIF)

10.9 The estimated opening balance of the Service Improvement Fund (SIF) as at the start of 2009/10 is £7.575m. This figure includes some £6.7m of Performance Reward Grant (PRG) receivable from the achievement of our LPSA2 stretch targets which will be accounted for in 2008/9. A further contribution from PRG of £2.6m is currently anticipated but this is subject to final audit of the relevant performance indicators. This means that the total SIF resources available for next year and beyond is estimated to be £10.221m.

Manchester City Council Item 5(b) Executive 11 February 2009 10.10 In line with agreements last year, the on-going service projects funded from SIF have for the most part been included within mainstream service budgets it is recommended, however, that the following be funded from the SIF:

• CRM rollout (this is expected to cost £1.744m in 2009/10, £1.344m in 2010/11 and £0.901m in 2011/12. There will be no further resource required after 2011/12 • MIP management costs – a proportion of the MIP management costs have traditionally been met from the SIF. It is proposed that this arrangement continue for a further year. The level of costs to be picked up by SIF is £2.416m • Two projects to be managed by the MIP director, the Customer Strategy and the Information Strategy require funding of £1.107m and £745,000 respectively over the next three years. It is proposed that this be met from the SIF as they are both time limited and do not require funding after 2011/12 • There is still a balance of SIF held for the use of the Crime and Disorder Partnership of around £1.4m from the £1.97m PRG received relating to the achievement of the LPSA1 targets relating to crime and disorder. Of this, around £338,000 has been agreed for analytical capacity costs and the balance is available for new projects.

10.11 The final use of SIF to support these schemes will be subject detailed proposals for approval through the revenue gateway process and by the City Treasurer and Chief Executive in line with the original process for SIF approvals.

11. Prudential Indicators

11.1 Under the Prudential Regime, the Council need to agree a range of indicators (the Prudential Indicators) that relate to the prudence and affordability of its capital proposals. A report outlining a proposed capital programme is presented as Annex 2 to the budget report and in addition, elsewhere on the agenda is a report concerning proposals for the Town Hall complex. The prudential indicators for both the General Fund and the Housing Revenue Account are detailed in Appendix 4 to this report and indicate resources are sufficient to support the Capital Programme as proposed in Annex 2 and the proposals contained within the report on the Town Hall complex. Any changes members make to the programme, in particular any decision to increase the programme or utilise unsupported borrowing, may have an impact on these indicators.

11.2 The indicators shown for the incremental impact of capital investments on Council Tax and Housing Rents are the gross impact before taking into account revenue support received through the Revenue Support Grant and HRA subsidy.

Manchester City Council Item 5(b) Executive 11 February 2009 12. Budget Consultation and Scrutiny

12.1 A document requesting comments on the Councils budget and performance similar in style to the one used last year was once again produced this year. The document was made widely available at Council public buildings including the Town Hall, Community Centres, Advice Centres, Libraries, Leisure Centres, Adult Education Centres and Citizen Advice Bureaus. Copies were also provided to the City Centre Management Company for circulation to businesses in Manchester. Voluntary Sector groups were e-mailed with details of the consultation exercise through the Community Network for Manchester. In addition, the document was posted onto the Council’s web site with a link from the home page. An article giving details of the consultation was also published in the January edition of the Manchester People.

12.2 A total of 22 responses to the consultation have been received of which 6 were requests for further information. These responses are summarised in Appendix 6 to this report. A hard copy of the responses received will be made available for the Executive at the meeting.

12.3 Scrutiny Committees in January considered the business plans however there were no recommendations arising that would directly impact on the budget as reported. The budget proposals as recommended by Executive and any proposed Opposition amendments will be considered by the Resource and Governance Overview and Scrutiny Committee at a special meeting on 23 February before being put to Council on 4 March.

13. Trading Organisation Targets for 2009/10

13.1 Those services traditionally considered as trading under the old Compulsory Competitive Tendering Regime are set a profit / loss target similar to the cash limit budget targets set for General Fund services. The trading positions they face are outlined within the appropriate business plan rather than providing separate business plans as in previous years. A summary of the trading position facing these services as identified in business plans is shown below:

13.2 Response Maintenance (City Works) - City Works has been subject to a transfer of a large proportion of its work to Manchester Working, as a consequence City Works estimated that they would make a loss in 2008/9 of £530,000. As more housing stock is transferred and the remaining City Works function transfers to Manchester Working the projected loss will reduce and a surplus is expected in 2009/10 of £104,000.

13.3 Manchester Contracts - are predicting a profit of £225,000 in 2009/10, slightly higher than their target profit for 2008/9. Recommendations arising from the Highways SIP will inform the future direction and budgetary implications for Manchester Contracts. 2009/10 will be another challenging year for the service. To meet business plan targets it is essential that sufficient external business is secured. During the current economic downturn Manchester Contracts is competing with private contractors for a decreasing Manchester City Council Item 5(b) Executive 11 February 2009 market share. To remain competitive, a number of measures have been introduced to increase productivity and manage costs.

13.4 Street Scene Services – Prior to 2008/09, the budget allocated for these services had been significantly understated and out turn had been subsidised by surpluses from other trading services. The 2008/09 budget allocated for Street Scene Services (SSS) was increased by £800,000 to take account of this budget pressure. During 2008/09 significant progress has been made to achieve financial transparency, increase understanding and management accountability. An external review of Street Scene Services has been undertaken. Overall the review determined that there is a good quality service being provided by committed and engaged management teams. At November 2008, the review of Street Scene Services has moved into the project implementation phase. Potential savings arising from the review recommendations have yet to be fully quantified. The delivery of street cleansing and grounds maintenance continues to be of high focus and a priority for Members and residents. Whilst the service is improving, there is evidence of lowering public perception. This may mean that there is a need to drive any further savings back into the service. A business plan target is proposed of surplus of £88,000.

13.5 Manchester Fayre – For 2008-11 members agreed that the charge for a school meal should increase from September each year. In order to contain the required price increases, the requirement for Manchester Fayre to plan to achieve a surplus on catering was removed (i.e. catering would plan to break even over the three years of the 2008/9 to 2010/11 business plan). Due to the uneven occurrence of meal days year on year the business plan for 2008/9 to 2010/11 shows a surplus in 2008/9 of £234,000, a deficit in 2009/10 of £458,000 and a surplus in 2010/11 of £221,000.

13.6 These figure have since been adjusted to reflect efficiency savings of £62,000 associated with the transfer of procurement staff to Corporate Procurement. Price increases for primary school meals of 11p in 2008/9, 13p in 2009/10 and 15p in 2010/11 making primary school meal prices increase to £2.11 in 2010/11. (These figures assume that the Schools Forum would be willing to release to Manchester Fayre their share of the School Lunch Grant for all three years of the business plan). The Forum have currently only agreed to release the grant for 2008/9, £189,224 for primary meals and £52,389 for high school meals provided by Manchester Fayre. The projected outturn for 2008/09 is on track and it is assumed that Manchester Fayre will deliver the budgeted bottom line. Due to the on-going effect of procurement savings made in 2008/9, the services target for 2009/10 has come down from a projected loss of £458,000 to a projected loss of £398,000.

13.7 MEDC – has been set a target surplus for 2008/9 of £118,000 which it is expecting to achieve. It is proposed that for 2009/10 the service is set a target trading profit of £121,000.

Members are asked to approve the targets for the trading organisations in 2009/10 as discussed above and summarised in the table below: Manchester City Council Item 5(b) Executive 11 February 2009

Revised Proposed Target 08/9 Target 09/10 Trading Organisation (Surplus)/Loss (Surplus)/Loss £ £ Manchester Fayre (296) 398 Manchester Contracts (215) (220) Response Maintenance (City 530 (103) Works) Street Scene Services (86) (88) MEDC (118) (121) Total Loss / (Surplus) (182) (134)

Appendices

Manchester City Council Item 5(b) Executive 11 February 2009

Business Plan Cash Limits APPENDIX 1

2009/10 2010/11 2011/12 Department Business Plan Area Business Business Business plan Cash plan Cash Plan limit Limit Cash Limit £000s £000s £000s

Children's Services: Children and Young People 97,507 97,902 97,722 Education Services 22,095 21,410 21,856 Strategy Performance and Operations 25,185 25,703 26,260 Total Children's Services 144,787 145,015 145,838

Chief Executive: Head of Executive Office 2,032 2,077 2,124 Head of Legal Services 3,566 3,700 3,764 Head of Statutory Services 2,310 2,363 2,398 Assistant Chief Executive (Performance) 6,094 5,447 5,410 Head of Crime and Disorder 1,506 1,466 1,455 Director of Manchester Health Unit 9 9 9 Assistant Chief Executive (Culture) 6,790 6,756 6,770 Director of Manchester Galleries 3,838 3,742 3,684 Head of Regeneration 3,516 3,760 3,806 Head of Adult Education 397 402 399 Head of Planning 2,280 2,220 2,343 MEDC (121) (124) (127) Corporate Items (non Business Plan) 4,995 5,106 5,220 Transport & Engineering: Head of Engineering Services 13,025 13,232 12,943 Head of Transport 2,316 2,345 2,219 Subtotal Transport & Engineering 15,341 15,577 15,162

Total Chief Executive 52,553 52,501 52,417

Housing: Housing (Excl Supp People Grant) 5,290 4,689 5,151 Supporting People Grant 37,701 36,062 36,062 Total Housing 42,991 40,751 41,213

Manchester City Council Item 5(b) Executive 11 February 2009

Corporate Services: Capital Programme Director 825 795 778 Head of Financial Management 5,239 5,261 5,229 Head of Human Resources 1,549 1,558 1,546 Strategic Head of Council Tax and Benefits 3,793 3,836 3,807 Head of Valuation and Property 5,923 5,977 5,932 Corporate Procurement 931 949 942 Corporate Items (non Business Plan) (13,116) (12,560) (12,503) Total Corporate Services 5,144 5,816 5,731

Neighbourhood Services: Adult Services 134,537 138,120 142,853 Head of Libraries and Information 12,533 13,520 12,407 Library Theatre Company 1,077 1,087 1,084 Head of Sports and Leisure 14,700 14,193 14,089 Head of Environmental and Contracting 31,089 31,179 31,253 Services Trading: Head of Contracting Services (290) (306) (328) Manchester Contracts 269 275 281 Manchester Markets (1,307) (1,369) (1,433) Town Hall services 3,123 3,142 3,074 Manchester Fayre (303) (310) (317) Subtotal Trading 1,492 1,432 1,277

Total Neighbourhood Services 195,428 199,531 202,963

Manchester Improvement Programme MIP Team 1,572 4,069 4,151 Corporate Technology Unit (939) (1,064) (1,147) Total Manchester Improvement Programme 633 3,005 3,004

Total of Business Plans 441,536 446,619 451,166

Corporate Growth not yet allocated 5,262 4,730 4,831 Procurement & Housekeeping efficiencies not yet (3,421) (6,150) (5,571) allocated 443,377 445,199 447,426 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Summary - Mainstream Savings Proposals business plan 2009/10

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Children's Services

Children's Services - Children, New Proposals for 09/10 Business Plan Young People and Families Externalise the provision of 2 x Children's Centres Change location - need approvals therefore savings in first year likely to Efficiency 180 60 slip & will be difficult to achieve Close Longhurst Children's Centre Change location - need approvals therefore savings in first year likely to Service 90 30 slip Redesign 50% reduction in six commissioning budgets Efficiency 210 Reduction in ex CS grant Efficiency 310 Placement savings from 2 x new children's homes Efficiency 300 Change location - need approvals therefore savings in first year likely to Service 60 Relocate day care provision from Daisy Bank slip Redesign Integrate District Managers with GMs in NHS Efficiency 0 100 Manchester Feasibility study with NHS Manchester to be undertaken Dis-establish Child Assesment Framework (CAF) Service 0 48 Programme Manager post As Child Assesment Framework (CAF) becomes embedded Redesign Reduce costs of project worker for Private Fostering Efficiency 30 from 1 FTE to 0.5FTE Private fostering becomes embedded. Do not establish/disestablish Contact Centre Co- Service 34 ordinator Post No longer required Redesign Service 3 1 Top slice Child Death Review Processes ABG 3% Funding for Year 11-12 not known. Reduction Reduce running costs of Safeguarding Improvement Unit (Formerly QAPMU) through VFM and Efficiency 0 consideration of outsourcing C. Govt direction of travel to increase independence of service from L.A. Service 28 3 Top Slice Care Matters ABG at 3% Funding for Year 11-12 not known. Reduction Reduce numbers of Independent Foster Care Plus £800k saving in 09-10 on overall reduction in LAC placement costs Reduced Placements and reduce numbers of Independent (challenging target) - predicated on growth in Social Work Service. 753 650 1,650 Demand Residential Placements - base

This must be viewed in line with investment on budget pressures template. Service 197 1,247 1,378 Reduce numbers of Independent Foster Care Need this to achieve the savings. £400k Savings in 2009-10 on reducing Reduction Placements - Cost Avoid if get FP SIP investment numbers and IFAs - predicated on growth in Family Placement Service. Reduce Unit Cost of in house residential provision VFM study to be undertaken. Impact on staffing and terms and conditions. Efficiency 500 1,500 through VFM study Savings to be calculated and verified Top slice ABG funding at 3% on Positive Activities for Service 56 9 Young People Funding for Year 11-12 not known Reduction Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Note £342k already taken recurrently from 2008/09 budget onwards. Maximise increased Early Years grant-income and Establish if general grant increases in 09/10 and what increased proportion Efficiency 908 330 330 reduce by 3% p.a. core budget costs (£10.5m at of activity currently funded from core budget can be shifted to grant 2008/09) expenditure to realise mainstream savings. Service Reduce proportion of circa £2m pa spent on services Feasibility study with NHS Manchester to be undertaken and savings 66 66 148 Reduction commissioned from Manchester NHS/PCT calculator and verified. Reduce performance monitoring officers from Service 100 12.5FTE to 8 FTE Agreed at CYP&F Management Team Reduction Additional Efficiency (To be Determined) Service to review potential areas to make up budget gap Efficiency 60 Reduce 1 x FTE Integrated Childrens System (ICS) Service 0 20 post to 0.5 FTE ICS post As Integrated Childrens System (ICS) becomes embedded. Reduction Reduction in unaccompanied Asylum Seeker Efficiency 500 numbers Total - Children, Young People 4,385 4,064 3,506 and Families

Education New Proposals for 09/10 Business Plan Funding required for transitional period following Education Services Premises Transition Costs Efficiency 189 Redesign. Funding establish to support strategic development within Educational Strategy Fund Services for School Improvement etc. Such development opportunities Efficiency 265 17 will now be curtailed. Service SEN Funding charge to DSG Current spending on SEN should correctly belong to the DSG 210 Redesign Additional Efficiency (To be determined) Service to review potential areas to make up budget gap Efficiency 12 May impact on service capacity to cover workload. Relies on staff Vacancy Saving turnover - which may be less likely should the country remain in recession Efficiency 90 10 for 2010/11 Total Education 766 27 0 Strategy, performance & operations New Proposals for 09/10 Business Plan Reduce Higher Education Support Team as part of Service Transfer of functions - minimal impact assumed. 38 0 0 planned transition to SLC (Student Loans Company) Redesign Administration is a key function which frees up operational staff time at the front end. Any reduction may impinge on this, however, as the saving is Service Savings from review of admin support 45 0 0 part of a review then this should assist feasibility and reduce negative Redesign impact. Charge staff time as appropriate to capital Reduces the amount available to actually spend on the capital programme Service 100 0 0 programme for schools itself Redesign Reduce use of School Organisation and Development May delay some areas but this will be managed within the programme of Service 25 0 0 Consultant budgets work Redesign Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Service capacity will be limited. May impact on ability to develop and improve annual performance assessments or move towards meeting the Service Strategy and Performance Service Restructure 390 100 0 challenging of the new inspection regime for CAA. Includes efficiencies Redesign against statistical information service. Savings from School organisation & Development Service Capacity will be limited. May impact on ability to develop and Service 40 restructure improve school capital issues. Redesign To be achieved through general efficiencies across all (possibly one or two exceptions to be determined) budget areas in SPO. This will be reviewed if Additional Efficiency (To be Determined) Efficiency 244 additional specific proposals become available through further efficiency planning.

Total - Strategy, performance & 882 100 0 operations

Total Total Children's Services Children's 6,033 4,191 3,506 Services Analysed between: Income Efficiency 3,798 2,017 330 Reduced 753 650 1,650 Demand Service 1,032 178 0 Redesign Service 450 1,346 1,526 Reduction 6,033 4,191 3,506

Target Savings 5,105 4,341 4,211 Shortfall/(over -928 150 705 recovery)

Chief Executives

CEX - City Solicitor

Head of Legal Services Carried forward from 08/09 Business Plan

Increased fees on development agreements with Income 25 CPO's Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Recharge of off site storage costs to client Income 20 departments

Total Legal Services 45 0 0

Head of Statutory Services Carried forward from 08/09 Business Plan Increased income in registration services Income 16 16 New Proposals for 09/10 Business Plan Increased income in registration services Income 17 Total Statutory Services 16 16 17

CEX - Performance Assistant Chief Executive Carried forward from 08/09 Business Plan (Performance) Reduction in cost of organisational development and performance management and monitoring services Efficiency 174 430 147 across the Council. New Proposals for 09/10 Business Plan Review and rationalisation of all performance management, organisational development and Efficiency 402 77 0 research & intelligence functions across the council to achieve more efficient working practices. Total Performance 576 507 147

Head of Crime and Disorder Savings to be identified within service Efficiency 67 60 44 Total Crime & Disorder 67 60 44 Cultural Services Carried forward from 08/09 Business Plan Service Reduced Expenditure on new events & development of existing activities 60 61 43 Events Unit Reduction Cultural Venues - URBIS Efficiency 43 44 65 Service Cultural Development Fund Reduced range of feasibility studies 7 7 13 Reduction

New Proposals for 09/10 Business Plan Programme mgmt Notional Reduction on insufficient budget (reliant on natural turnover) Efficiency 4 4 5 One off WNF to fund shortfall Efficiency 281 -281 Total Cultural Services 395 -165 126

Director of Manchester City Carried forward from 08/09 Business Plan This proposal will require us to vacate this storage facility currently leased Galleries Cease Use of Moston Lane Storage from Valuation and Property services. There should be no impact on Efficiency 0 14 0 customers. Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Reduce Level of investment for Marketing Service This proposal will require us to increase our use of web based advertising 15 0 12 Redesign and reduce the amount of print and traditional advertising. This proposal will reduce the opportunity that the Department will have to Service purchase new ICT equipment or keep up to date with new technologies. 8 14 Reduce expenditure on ICT (Figure changed: 10/11 This may impact upon our delivery of service in a competitive leisure Redesign was £4k) environment. Hold vacant Posts Efficiency 47 Redesign/ Restructure of Establishment £212K proposed savings against an MCC staff spend of c£2m in 2010/11 represents 11% of the staff budget in the areas of visitor services, events, Service 16 141 40 exhibitions and collections and asset management. This will be a priority Redesign for a MIP Review. New Proposals for 09/10 Business Plan Re-designation of Gallery T3 from a community Efficiency 5 focused gallery space Improved efficiency of buildings management This proposal will require initial investment through ‘Invest to Save’ to systems enable external consultants to devise a programme of change relating to Efficiency 10 20 20 our M&E equipment. Income Growth Income 31 62 32 One off WNF to fund shortfall Efficiency 65 -65 Total Galleries 192 186 109

Head of Regeneration WNF to fund shortfall Continuing to use WNF to fund regeneration team posts for a further year. Efficiency 156 0 0 One off WNF to fund shortfall Efficiency 101 -101 Total Regen 257 -101 0

Adult Education General Efficiencies to be Achieved Efficiency 9 4 12 Total Adult Education 9 4 12

Planning Bringing landscape advice in house Efficiency 40 Section 106 management fee Efficiency 40 Critically review vacant posts Efficiency 140 220 45 Total Planning 220 220 45

Head of Transport & Engineering ServicesCEX Transport - Efficiency savings from revised Efficiency 70 30 62 service delivery arrangements CEX Transport - Increased recharge to PTE to cover Income 100 management and support costs NS Engineering - Efficiencies in delivering projects Efficiency 100 100 NS Engineering - Efficiency savings following the Efficiency 600 Service Improvement Project

Total Transport & Engineering 270 130 662 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Grand Total - Grand Total - Chief Executives Chief 2,047 857 1,162 Executives Analysed between: Income 192 78 49 Efficiency 1,749 556 1,005 Reduced Demand Service 39 155 52 Redesign Service 67 68 56 Reduction 2,047 857 1,162 Target Savings 2,701 1,928 2,483 Shortfall/(over 654 1,071 1,321 recovery)

Corporate Services

Carried forward from 08/09 Business Plan/New Capital Programme Director proposals Corporate Technical Services General savings against budgets Efficiency 17 17 12 Education Programme Unit General savings against budgets Efficiency 15 15 11 Capital Programme Group General savings against budgets Efficiency 16 17 12 Total Capital programme 48 49 35

New Proposals for 09/10 Business Plan Financial Management Establish Shared Service Centre and The establishment of the new shared service centre should lead to Efficiency 552 117 152 review/implement new structures improved service Total Financial Management 552 117 152 New Proposals for 09/10 Business Plan Human Resources Savings from Service Improvement Review Efficiency 500 26 0 Further efficiency savings Details of savings still to be identified Efficiency 47 Total Human Resources 500 26 47 New Proposals for 09/10 Business Plan Revenues & Benefits Savings in postage Efficiency 10 5 5 Further Efficiency savings to be identified within the Income 87 37 110 service Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Total Revenues & Benefits 97 42 115 New Proposals for 09/10 Business Plan Corporate Property Efficiency savings to be identified within the service Efficiency 182 79 179

Total Corporate Property 182 79 179 Procurement New Proposals for 09/10 Business Plan Efficiency savings to be identified within the service Efficiency 8 3 28 Total Procurement 8 3 28

Grand Total - Grand Total - Corporate Corporate 1,387 316 556 Services Services Analysed between: Income 87 37 110 Efficiency 1,300 279 446 Reduced Demand Service Redesign Service Reduction 1,387 316 556 Target Savings 1,379 302 517 Shortfall/(over -8 -14 -39 recovery)

Neighbourhood Services

Director Adult Services Older Peoples Services Carried forward from 08/09 Business Plan Savings on Residential/home care as a result of opening Extra Care Service 460 200 Sheltered Housing and Day Care Dementia Centre Redesign Home Care Commissioning savings Efficiency 575 175 Reduce provision for growth in Home Care by continuing scrutiny by Efficiency 270 200 weekly panels 1% Efficiency Saving Efficiency 150 150 150 Reablement savings - Intensive short term support to reduce the need for Service 1,420 400 400 long term care. Redesign Service Electronic Monitoring one off costs removed from base 200 Redesign New Proposals for 09/10 Business Plan Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Savings on Individual Budgets through Resource Allocation System and Efficiency 100 100 100 more efficient use of resources. Reduction in Nursing home placements through transfers due to Service continuing care. Changes in continuing care criteria mean more nursing 1,300 Redesign home placements are now eligable for health care funding.

Physical Disability Carried forward from 08/09 Business Plan 1% Efficiency Saving (Figures changed: 09/10 & 10/11 were £100k) Efficiency 125 125 125 Saving on Cash Individual Budgets assumes 6% reduction in resources Efficiency 250 425 allocated Savings on Residential placements as a result of opening additional Service 85 supported accommodation units Redesign

Learning Disability Carried forward from 08/09 Business Plan Efficiency 100 100 100 Reduction in cost of care packages transferring from Children's Service 1% Efficiency Saving Efficiency 100 100 100

Mental Health Carried forward from 08/09 Business Plan Improve commissioning in Korsakoffs Cases Efficiency 150 300 1% Efficiency Saving Efficiency 100 100 100

Finance and Commissioning Carried forward from 08/09 Business Plan Modernisation of charging policy (Figures changed: 09/10 & 10/11 were Income 775 £100k)

Commissioning, Prevention and Performance Carried forward from 08/09 Business Plan Reduction in Care Costs from investment in prevention programme Service 1,000 500 500 (Figures changed: 10/11 was £0)) Redesign Service 125 Reduction in high cost places Redesign

Other Budgets Carried forward from 08/09 Business Plan Service 50 Business process re engineering Redesign Improved efficiency in how care managers operate due to an improved IT Efficiency 100 system (MiCare) New Proposals for 09/10 Business Plan Service 100 100 100 Mobile Working Redesign In - house services - improvement in unit costs Efficiency 216 200 200

Income Generation Proposals New Proposals for 09/10 Business Plan Income from deferred payments for residential / nursing clients with Income 300 property Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Charging Independent Living fund (ILF) clients under revised charging Income 450 policy. A range of additional savings have been identified including demand and Recently identified savings Efficiency 505 795 growth management and business unit efficiencies Total Adult Services 9,006 3,970 1,875

New Proposals for 09/10 Business Plan Trading Services Manchester Contracts Reduce sub contractor costs Efficiency 8 Trading Services - Building Cleaning Reduce ‘casual bank’ costs Efficiency 9 9 3 Trading Services - Fleet management Operating Licences for HGV vehicles Efficiency 2 4 Town Hall Rental income -increased rental charge to external town hall tenants Income 50 48 Service 0 40 Town Hall Efficiency in Town Hall Service Redesign Service 25 Town Hall Efficiency in office cleaning Redesign Service 25 Town Hall Reduce number of landlord inspections Reduction Service 12 Town Hall Reduce number of public reception points Redesign Reduce unit consumption of utilities by 10% through maintenenace & 0 51 51 Town Hall Engineering work on the heating system. Efficiency Carried forward from 08/09 Business Plan Manchester Markets Repairs & Maintenance Efficiency 8 4 0 Manchester Markets Administration Efficiency 16 8 10 Manchester Markets Repairs to equipment Efficiency 16 10 Manchester Markets Cleansing supplies Efficiency 5 Manchester Markets Fixtures and fittings Efficiency 5 4 Manchester Markets Transport Efficiency 4 9 Total Trading Services 156 93 187

Neighbourhood Strategy

Head of Libraries and Information Services Carried forward from 08/09 Business Plan Partnership working with other local authorities. Back office change. No One AGMA or Bibliographic Office Efficiency 0 200 impact on customer Service 160 Move to EDI for ordering & payment Faster paying of invoices to suppliers No impact on residents Redesign Only possible following refurbishment of building. Reduction in service Service Staffing restructure in Central Library (Figures points to one integrated library offer. Some staff redeployment necessary. 345 Reduction changed: 10/11 was £400k) Should improve customer service offer. Commissioning of Business Information Services by partnership working with AGMA. Joined up approach to business Income 3 2 AGMA information services for customers. Customer improvement Commissioning of Library Services by The partnership working with The Manchester College. Should join up library Income 10 Manchester College services for Manchester residents. Improved customer service Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Service 10 Provision of family history research Enhanced premium service for customers who wish to pay Redesign Revision of Library Accommodation Strategy Increased use of automated self service reduces the numbber of service Service 0 315 373 points required. Some staff redeployment required. Redesign New Proposals for 09/10 Business Plan Service 5 5 Replace postage costs with e notification improved customer service for those residents with the technology Redesign Total Libraries 28 682 718

Library Theatre Company

MIP identified savings Efficiencies 30 13 Savings to be identified within service Efficiencies 30 30 13 30

Head of Sports and Leisure Outdoor Leisure Services Service 38 Further restructuring in Outdoor Leisure Redesign Further efficiencies to be identified Efficiency 155 45 Service 30 30 25 Review of income opportunities & expenditure in Mersey Valley Redesign Service 90 60 31 Efficiencies in general parks expenditure Redesign Service 15 15 0 Seeking alternative funding source for Wythenshawe Community Farm Redesign Service 10 0 0 Review of bowls and football expenditure Redesign Profit Share arrangements with Wythenshawe Forum & Manchester Sports Income 200 200 130 Leisure Trusts New Proposals for 09/10 Business Plan Increasing income through the review of contracts and charging structures Income 100 55 50 in parks inclusing Car Parking at key parks. Reduction in utility charges in parks through the introduction of new and Efficiency 0 35 30 emerging technologies Efficiency in contracted services in parks Income 82 38 20 Sponsorship & Adoption schemes for bedding in parks Income 10 20 0

Indoor Leisure Carried forward from 08/09 Business Plan Efficiency savings at North City (Figures changed: 09/10 was £16k, 10/11 Efficiency 36 0 0 was £16k) General reduction in expenditure at the Velodrome (Figures changed: Efficiency 4 4 1 09/10 & 10/11 were £2k) New Proposals for 09/10 Business Plan VAT efficiencies through Trusts Efficiency 130 66 0 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Sports Development Carried forward from 08/09 Business Plan Service 9 13 7 General reduction in Sports Development expenditure Reduction Increased income from National Governing Body partners Income 9 13 7 (These two proposals were combined in the previous business plan, showing £16k for 09/10 and 10/11.)

Community Activity Carried forward from 08/09 Business Plan Reduction in Skatepark Revenue support (Figures changed: 09/10 & 10/11 Service 12 12 10 were £30k) Reduction New Proposals for 09/10 Business Plan Service 10 3 0 Parklands School Redesign Service 6 6 8 Efficiency to be Identified Reduction Service 0 18 0 Rushford Park - Identify football club to take over operation Redesign Sports Events (New Proposal for 09/10 Business Efficiency savings across events achieved by synergy and economy of Efficiency 29 40 18 Plan) scale Policy, Performance & Administration (New Proposal Efficiency 58 67 33 for 09/10 Business Plan) General reduction in central office and administration costs Total Sports & Leisure 878 850 414

Environmental Services Carried forward from 08/09 Business Plan Sponsorship Income Income 250 250 Rationalisation of City Centre Ops Mngt Service 30 0 0 Redesign Reprocessing of street scene waste Service 200 0 Redesign Sustainable Planting Service 10 10 0 Redesign Efficiencies in waste collection Efficiency 0 50 0 Green space team Efficiency 25 0 0 Parking Service Efficiency 25 0 0 Review of Waste & Recycling processes Efficiency 25 0 0 Review of Environmental Crimes unit Efficiency 60

New Proposals for 09/10 Business Plan Third Party CCCTv Income Income 200 0

Abor reduce tree inspection Efficiency 50

Green spaces Efficiency 50

Bus lane income Efficiency 200 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Improved Payment Rate for Fixed Penalty Notices Service 38 0 0 Redesign Licensing Contribution to support costs Service 80 0 0 Redesign Street Traders Charge Increase Income 3 Controls on issuing of residual waste bins Service 10 Redesign Soft Procedural Changes eg EOC Scripts , Reduce Service 15 15 Commercial Abuse Redesign Limit to Free Service Disposal Savings Service 50 Redesign Bulky Collections Contract Savings Efficiencies 50 50 A more efficient call handling service and improved interaction with residents & businesses will reduce the 12 13 cost of call handling and improve the service. Efficiencies Street Environment-Review of Management 100 43 Structures Efficiencies Charge to Utility Companies for Graffiti Removal on 10 10 Junction Boxes Income Reserve Contribution to Great Northern Square Efficiencies 23 VFM review Grounds Maintenance Efficiencies 100 Streat Cleaning-Review of Management Structures Efficiencies 100 43 Alleyway Clearance Efficiencies 100 Review of SSS service improvements Efficiencies 100 125 Strategy Parking Review Income 150 150 Review of Staffing Structure Efficiencies 8 14 0 Saving on Office Costs Efficiencies 2 3 0 Additional saving not identified Efficiencies 50 Total Environmental Services 704 1,674 524

Grand Total - Grand Total - Neighbourhood Neighbourhoo 10,802 7,282 3,748 Services d Services Analysed between: Income 2,152 938 505 Efficiency 3,446 4,228 1,413 Reduced Demand Service 5,158 2,091 1,469 Redesign Service 46 25 362 Reduction 10,802 7,282 3,748 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Target Savings 2,479 3,013 1,561 Shortfall/(over -8,323 -4,269 -2,187 recovery)

Director of Housing Homelessness Central point of Presentation Efficiency 50 0 Furniture Storage Procedures Efficiency 120 Efficiencies generated from the Adult Social Care change programme Efficiency 48 Private Sector Housing Immigration sponsorship income Income 9 9 0 Transport expenditure reductions Efficiency 4 4 0 Energy efficiency group Efficiency 34 0 0 Reduced Accommodation Efficiency 28 29 0 Service Termination of agency staff 300 0 0 Redesign Service Reduced Car Park Passes 20 0 Redesign Service Posts lost through staff turnover (5 posts) 82 83 0 Redesign Increased income Income 20 20 0 Efficiencies from a review of Private Sector Housing / Neighbourhood Service 231 1,001 1,397 Services Redesign Service Strategic Housing Restructure of Housing Strategy Team 28 2 38 Redesign Efficiencies due to revised Service Level Agreements with Registered Anti Social Behaviour Team Efficiency 212 206 206 Social Landlords & the transfer of functions to partners

Supporting People Reduced employment of consultants and finance support Efficiency 40 8 0 Service Staff restructuring 0 50 0 Redesign Grand Total - Grand Total - Housing 1,058 1,532 1,689 Housing Analysed between: Income 29 29 0 Efficiency 368 367 254 Reduced Demand Service 661 1,136 1,435 Redesign Service Reduction 1,058 1,532 1,689 Target Savings 207 309 1,217 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 2

Savings Profile (£'000) Type of Business Plan Area Mainstream Savings Proposal Further details Saving 2009/10 2010/11 2011/12

Shortfall/(over -851 -1,223 -472 recovery) Manchester Improvement Service Corporate Technology Further Efficiency savings to be identified within the Efficiency 241 104 59 service Total Corporate Technology 241 104 59

GRAND TOTAL - ALL BUSINESS PLAN AREAS 21,568 14,282 10,720

Corporate Efficiency Items Housekeeping Efficiencies Efficiency 514 515 200 Review of Inflation Assumptions Efficiency 1,000 Review of Insurance Fund Efficiency 200 Manchester Working premium Efficiency 450 -50 -50 2,164 465 150

GRAND TOTALIncluding Corporate items 23,732 14,747 10,870

Analysed between: Income 2,460 1,082 664 Efficiency 13,066 8,016 3,657 Reduced 753 650 1,650 Demand Service 6,890 3,560 2,956 Redesign Service 563 1,439 1,944 Reduction 23,732 14,747 10,870

Cumulative 23,732 38,478 49,348 Total Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3 Budget Pressures and Growth Bids For 2009/2010 Business Plans

Budget Pressure Profile (£'000) Business Plan Area (In year not cumulative) Budget Pressure Further details Type

2009/10 2010/11 2011/12

Children's Services

Children Young People and Families Budget Pressures

Gross of cost avoidance - see also efficiencies. Service standard at risk if Family Placement SIP pressure not met - also issue for helping to expand service and reduce Demand Led Growth 1,097 665 665 external placement cost Sub Total Pressures 1,097 665 665 Growth Bids

My Place - revenue implications of external capital Growth 160 160 0 investment (Youth Service) Match funding to support external capital investment in the Youth Service. To support the service redesign and "Think Family" model. Positive Growth 500 500 500 Additional SW posts - service reform impact on LAC prevention and intervention. The service has estimated the potential investment slippage in the first Rephasing/Review Children's Growth Proposals Growth Slip (422) 400 year of any approved growth provision. This was built into the 08/09 business plan and had been due to fall out in Establishment of District Working Growth 100 09/10 can not be achieved. Sub Total Growth 338 1,060 500

Extension of personal education Allowances in line with government ABG mainstream 203 120 Care Matters (Area Based Grant) requirements Child Death Review (Area Based Grant) ABG mainstream 5 PAYP (Area Based Grant) ABG mainstream 0 318 CAMHS ABG funded growth to support MH issues and challenging needs. ABG mainstream 81 85

Total - Children, Young People and 1,719 2,253 1,165 Families

Education Budget Pressures

As part of the Academy Agreement to Local Authority has agreed with Funding for Academy Programme DCSF that £40k per annum per Academy will be made available. There is Other 80 160 0 no choice regarding meeting this pressure. Collegiate Posts x 3 Previously funded through Learning Skills Council Discretionary Grant Loss of Grant 180 0 0 Sub Total Pressures 260 160 0 Growth Bids Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3 The 14-19 service was not reviewed as part of the Education Services Redesign project. It has subsequently been reviewed in house in order to assess the structure which would be required to meet the increasing 14-19 Structure demands on this sector. Failure to support this growth could have Growth 200 0 0 significant repercussions on the ability of the service to meet the challenges of the 14-19 agenda including diplomas and the target growth over the next 5 years. Sub Total Growth 200 0 0

There are national and local expectations of the extended schools programme. This additionally is funded through growth in ABG. It should ABG- Extended Schools be noted that there is a significant decrease in ABG from 2009/10 to SIF 1,205 (1,183) 2010/11 and the service has allowed for this movement in its medium term plan for extended schools.

Total - Education 1,665 (1,023) 0

Strategy, performance & operations Budget Pressures

Additional costs of rent from Beswick centre to Further cost pressure on Children's Services which would need to be Elizabeth House £52k (shared jointly with Adults found from within budgets that are already struggling to meet savings Other 52 0 0 Services) targets Further cost pressure on Children's Services which would need to be Alpha House development in Wythenshawe which is found from within budgets that are already struggling to meet savings Other 29 21 0 planned for September 2009 targets Additional cost of extending the threshold for home to Statutory Requirement for children on FSM (Total cost £166K see also Other 116 0 0 School transport from 3 to 2 miles growth bid below) Sub Total Pressures 197 21 0 Growth Bids

Manchester Health have already indicated their commitment to fund 50% of a Joint Commissioning Officer post. Without the match funding then Joint Commissioning Officer - match Health Funding this appointment may not be feasible. The appointment would provide an Growth 50 0 0 excellent opportunity for real joined up work which would benefit all in terms of accessing the market, aligning resources and achieving VFM. Sub Total Growth 50 0 0

Addit cost of extending home to School transport from 3 to 2 miles ABG Mainstream Statutory Requirement for children on FSM (See also budget pressure SIF 50 50 above) Total - Strategy, performance & 297 71 0 operations

Total Children's Services Total Children's Services 3,681 1,301 1,165

Analysed between: Loss of Grant 180 0 0 Demand Led Growth 1,097 665 665 Other 277 181 0 Economic Downturn SIF Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3 ABG 1,539 (605) 0 Sub Total Pressures 3,093 241 665 Growth Bids 588 1,060 500 Grand Total 3,681 1,301 1,165

Chief Executives Chief Executives

Head of Regeneration

Result of zero based budgeting exercise identified key areas which had Realign mainstream budgets Growth 106 100 0 been under funded from mainstream resources. Total Regeneration Sub Total Growth 106 100 0

Head of Legal Services Budget Pressures

Agreed with Head of Personnel posts required due to increasing number Fill Agreed 1.5 Employment posts and complexity of Tribunal cases. Will reduce use of Counsel thereby Other 72 0 0 making savings for departments

Economic Downturn 700

Total Legal Services Sub Total Pressures 772 0 0

Head of Statutory Services Budget Pressures

Coroners - Reflects ongoing reported pressure in 2008/09 Other 100 0 0 Total Statutory Services Sub Total Pressures 100 0 0 Corporate Performance Staff consultation (£250k one off in 2009/10 to be Growth 500 (250) 0 funded from SIF) SIF - Cash Grants SIF 300 Total Corporate Performance 800 (250) 0

Cultural Services Growth Bids

Following a Council review in 2008/09, it has become clear that current Halle Orchestra Funding Growth 56 0 0 levels of revenue funding are insufficient to deliver to the objectives of both Cultural Strategy and Halle Orchestra. Events - Manchester Festival (£200k one off in Growth 500 (300) 0 2009/10 to be funded from SIF) Events - Manchester Day Development Growth 50 SIF Festive Lighting SIF 280 Total Culture Sub Total Growth 886 (300) 0 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3

Director of Manchester City Galleries Budget Pressures Curatorial Capacity to deliver Ford Madox Brown Other 10 32 (32) exhibition. Total Galleries Sub Total Pressures 10 32 (32)

Planning Shortfall in Planning Application & Building Regulation Economic Downturn 612 119 129 fee income Total Planning 612 119 129

Head of Transport & Engineering Services Budget Pressures CEX Transport-Highways Development Control Economic Downturn 169 Income CEX Transport-Traffic Engineering Service Requests Other 90 0 0

CEX Transport-Highway & Traffic client management Other 110 0 (110) NS Engineering - Street Lighting Energy Demand Growth 625 24 21 NS Engineering - Accident Trip Claims & repairs Other 80 4 4 Total Transport & Engineering Sub Total Pressures 1,074 28 (85)

Grand Total - Chief Grand Total - Chief Executives 4,360 (271) 12 Executives

Analysed between: Loss of Grant Other 462 36 (138) Economic Downturn 1,481 119 129 SIF 580 0 0 ABG Growth 1,837 (426) 21 Grand Total 4,360 (271) 12

Corporate Services Financial Management Growth Bids Financial Capacity to support partnership governance Growth 60 20 5 work Per the SIP 4 extra staff are required to move forward in embedding risk Risk management Growth 120 5 1 management across the council Total Financial Management 180 25 6

Grand Total - Corporate Grand Total - Corporate Services 180 25 6 Services Analysed between: Growth Bids 180 25 6 Grand Total 180 25 6 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3 Neighbourhood Services

Director Adult Services Budget Pressures Impact in 2011/12 of budget pressures identified in last years Medium Term Financial Plan to meet Demand led Growth 0 0 3,295 demographic pressures Increased accommodation costs to support multi Other 0 0 200 agency working Growth requested to support the ASC and LAA objectives and meet ABG Mainstream 176 Carers increased expectations and requirements Growth requested to support the ASC and LAA objectives and meet ABG Mainstream 75 Mental Capacity & IMCA increased expectations and requirements Growth requested to support the ASC and LAA objectives and meet Mental Health ABG Mainstream 129 increased expectations and requirements Total Adult Services Sub Total Pressures 380 0 3,495 Trading Services Growth Bids Bereavement Services-Re-erection of laid down Growth 50 0 0 memorial stones Fly-poster Removal SIF 150 Graffiti Removal SIF 95 Dedicated Dog Fouling Removal SIF 120 Street Washing and Gum Removal SIF 210 Total Trading Services Sub Total Growth 625 0 0

Neighbourhood Strategy Head of Libraries and Information Growth Bids Services Implementation of self issue technology (RFID) Growth (6) 557 (672) New Miles Platting Library PFI gap and staffing Growth 164 4 New Brookway Academy Library staffing Growth 253 6 New Beswick Academy Library staffing Growth 173 4 New Higher Blackley staffing Growth 138 3 New Higher Blackley estimated rent (unconfirmed) Growth 113 3 Extension of Sunday opening hours programme to Growth 3 3 each district SIF Homework Support Services SIF 514 SIF Extended Opening Hours for Libraries SIF 138 Total Libraries Sub Total Growth 646 1,401 (649) Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3 Sports & Leisure Head of Sports and Leisure Services Various SIF Schemes SIF 400 Total Sports & Leisure Sub Total Growth 400 0 0

Environmental Services Waste and Recycling Growth 2,275 1,143 (20) Street scene Growth 85 Environmental Education SIF 70 Proud Of SIF 50 Community gardens SIF 85 Green City SIF 200 Environmental Crimes officer SIF 255 CCTV Enforcement SIF 70 Total Environmental Services Sub Total Growth 3,090 1,143 (20)

Grand Total - Neighbourhood Grand Total - 5,141 2,544 2,826 Services/Strategy Neighbourhood Services

Analysed between: Demand Led Growth 0 0 3,295 Other 0 0 200 Economic Downturn SIF 2,357 0 0 ABG 380 0 0 Growth Bids 2,404 2,544 (669) Grand Total 5,141 2,544 2,826 Reduction in the Housing Market Renewal Grant resulting in less support Private Sector Housing for the revenue budget and reduced opportunity to capitalise salaries Loss of Grant 624 663 1,851 Housing against the HMR projects Anticipated Reduction in the Housing Market Renewal Grant resulting in Anti Social Behaviour Action Team less support for the revenue budget. Reduction in grant expected to be Loss of Grant 297 206 206 50/25/25 % in 09/10 to 11/12 Grand Total Housing Grand Total Housing 921 869 2,057 Analysed between: Loss of Grant 921 869 2,057 Other Growth Grand Total 921 869 2,057

MIP Director Further Web Development Growth 149 0 0 Mainstreaming of MIP costs funded from SIF Growth 0 2,465 0

Total MIP Director 149 2,465 0

GRAND TOTAL - ALL BUSINESS PLAN AREAS 14,432 6,933 6,066 Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 3

Corporate Rental Income (economic Downturn) Economic Downturn 1004 500 AGMA capacity for sub regional Development Growth 468 -230 Total Corporate Growth Items 1,472 270 0

Growth as included in Report 15,904 7,203 6,066

Analysed between: Loss of Grant 1,101 869 2,057 Demand Led Growth 1,097 665 3,960 Other 739 217 62 Economic Downturn 2,485 619 129 SIF 2,937 0 0 ABG 1,919 (605) 0 Sub Total 10,278 1,765 6,208 Growth Bids 5,626 5,438 (142) Grand Total 15,904 7,203 6,066

Cumulative Total 15,904 23,107 29,173 Growth Held in Contingency: Energy Costs Held in contingency Growth 300 Neighbourhood Funding Strategy Held in contingency Growth 1,000 1,300 0 0 Manchester City Council Item 5(b) Executive 11 February 2009

APPENDIX 4 Note: figures agreed last year shown in brackets

No. PRUDENTIAL INDICATOR 2009/10 2010/11 2011/12

1 Ratio of Financing Costs to Net Revenue Stream Non – HRA 9% (11%) 9% (11%) 9% HRA 21% (13%) 20% (12%) 21%

2 Incremental impact of Capital Investments on :- Council Tax (Band D, per annum) £5.98p £28.42p £64.26p Housing Rent per week £0.00p £0.00p £0.39p (See note A below) 3 Capital Expenditure £m £m £m Non - HRA 349 (301) 302 (274) 149 HRA 37 (38) 28 (28) 15 TOTAL 386 (339) 331 (302) 164 (see note B below) 4 Capital Financing Requirements (as at 31 £m £m £m March) Non - HRA 600 (600) 650 (650) 700 HRA 400 (400) 450 (450) 450 TOTAL 1,000 (1,000) 1,100 (1,100) 1,150

5 Authorised Limits for External Debt - £m £m £m Borrowing 1,167 (1,304) 1,167 (1,304) 1,167 Other Long Term Liabilities 0 0 0 0 0 TOTAL 1,167 (1,304) 1,167 (1,304) 1,167 (See note C below)

6 Operational Boundaries for External Debt - £m £m £m Borrowing 1,028 (996) 1,060 (1,053) 1,108 Other Long Term Liabilities 0 0 0 0 0 TOTAL 1,028 (996) 1,060 (1,053) 1,108 (see note C below)

7 Authority has adopted CIPFA's Code of Practice for Treasury Management in the Public Services Yes (Yes)

8 Upper Limits on Fixed Interest Rate Exposures Net Borrowing at Fixed Rates as a 73% (87%) 79% (93%) 80% percentage of Total Net Borrowing

9 Upper Limits on Variable Interest Rate Exposures Net Borrowing at Variable Rates as a 71% (92%) 89% (94%) 93% percentage of Total Net Borrowing

10 Maturity Structure of borrowing (2009/10 only) Manchester City Council Item 5(b) Executive 11 February 2009

Lower Upper Limit Limit under 12 months 0% (0%) 50% (50%) 12 months and within 24 months 0% (10%) 60% (60%) 24 months and within 5 years 20% (10%) 70% (60%) 5 years and within 10 years 0% (0%) 60% (60%) 10 years and above 10% (10%) 60% (60%)

12 Upper Limits for Principal Sums Invested for £ £ £ over 364 days 0 (0) 0 (0) 0

Note A - The indicators shown for the incremental impact of capital investments on Council Tax and Housing Rents are the gross impact before taking into account revenue support received through the Revenue Support Grant settlement and HRA subsidy. To the extent that the capital programme is funded, the % net impact on council tax and housing rents is reduced by additional grant received.

Note B – Capital expenditure figures include proposed expenditure on Town Hall and additional proposals for reserved resources.

Note C – Adjustments re. PFI and similar arrangements coming back onto the City Council’s Balance Sheet in 2009/10 and for operating leases being reclassified as finance leases in 2010/11 cannot, at this stage, be quantified. When the financial implications are fully known, adjustments will be made in accordance with International Financial reporting Standards (IFRS), which may require amendment of the Operational Boundary and the Authorised Limit during the year.

Who Opening Closing Responsible Balance Withdrawals Additions Balance for use Purpose 01/04/09 31/03/10 (see key £ £ £ £ above) EARMARKED RESERVES

HOSPITALITY AND TRADING SERVICES Legal requirement. Set up as a condition of grant aid to build market. To be used for minor renewals, repairs New Smithfield Market Initiative Fund 766,233 8,000 774,233 1 and to meet deficiencies on the revenue account. Any spend has to be agreed by Market Traders and Members

To fund initiatives that will benefit the development of New Smithfield wholesale NSM – Car Boot 190,831 124,000 314,831 1 market (can be drawn down by traders in settlement of service charge)

Repayable finance to schools for service improvement. Balance of additional surpluses over the Investment from Surpluses 227,023 10,000 237,023 1/3 Business Plan target from previous years agreed by members for investment within the catering service

CHILDREN’S SERVICES Schools reserves. These figures are subject to LMS Reserve 11,971,208 1,200,000 10,771,208 2 further confirmation by the City Treasurer

Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 5 Key to responsibilities: 1 – appropriate Strategic Director, 2 – schools, 3 – Executive (and Council where appropriate), 4 – City Treasurer Who Opening Closing Responsible Balance Withdrawals Additions Balance for use Purpose 01/04/09 31/03/10 (see key £ £ £ £ above) Established to fund the requirements re. PFI Temple Schools PFI 602,227 2,000 600,227 4 contract for the Temple school via our external contractors.

Established to fund the requirements re. PFI Wright Robinson PFI 549,416 208,597 758,013 4 contract for the Wright Robinson school via our external contractors.

Closed school balances 1,024,652 690,000 334,652 4 Closed schools balances

CORPORATE SERVICES Contributions from St Johns Gardens tenants St Johns Gardens Contingency 372,444 7,500 10,900 375,844 1 for maintenance works

ENVIRONMENTAL SERVICES Cemeteries Replacement 40,000 40,000 80,000 3 To provide additional grave spaces.

Set up in accordance with the agreement with Great Northern Square Maintenance Fund 275,319 36,000 311,319 1 the developers of the site. It will be used for upgrading of the square.

Established to fund the requirements over 25 Street Lighting PFI 7,479,804 636,768 282,275 7,125,311 4 years re. the PFI contract for Street Lighting service via our external contractors Reserve set aside from income arising from bus lane enforcement powers, which is set Bus Lane Enforcement Reserve 583,101 200,000 783,101 3 aside to support expenditure on transport and environmental improvements

Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 5 Key to responsibilities: 1 – appropriate Strategic Director, 2 – schools, 3 – Executive (and Council where appropriate), 4 – City Treasurer Who Opening Closing Responsible Balance Withdrawals Additions Balance for use 01/04/09 31/03/10 (see key £ £ £ £ above) MANCHESTER PARKING Reserve set aside from On-Street Parking surplus's year on year, which is set aside to On Street Parking 1,798,726 2,095,000 1,780,000 1,483,726 3 support expenditure on transport and environmental improvements

REVENUE GRANTS European Social Co-op 22,517 22,517 4 Committed to ESF Projects

MANCHESTER CITY GALLERY Art Fund 232,694 115,000 113,000 230,694 1 Purchase of Works of Art

CHILDREN’S SERVICES AND ADULT

SOCIAL CARE A fund created to deal with volatility of Community Care Reserve 1,475,000 1,475,000 4 forecasting expenditure on Care Home Placements

Cleopatra Reserve 1,500,000 1,500,000 4 Reserve to meet potential compensation claims

GENERAL FUND To invest in schemes that will pay back Development Fund 3,771,638 221,064 3,902,702 3 investments from savings

LABGI reserve 3,374,338 1,623,163 1,751,175 4 Projects being met from LABGI monies

Unused Dividends Reserve 3,870,000 14,130,000 14,300,000 4,040,000 3 Balance of dividends received not yet used Manchester City Council Item 5(b) Executive 11 February 2009 Appendix 5 Key to responsibilities: 1 – appropriate Strategic Director, 2 – schools, 3 – Executive (and Council where appropriate), 4 – City Treasurer Who Opening Closing Responsible Balance Withdrawals Additions Balance for use Purpose 01/04/09 31/03/10 (see key £ £ £ £ above)

Capital Fund Revenue Reserve 22,511,711 20,504,893 17,076,000 19,032,818 3 Council’s contribution to major capital schemes

Service Improvement Fund 7,574,940 6,006,000 2,645,785 4,214,725 4 To fund improvements in Council Services

To meet future increases and any pensions Pension Risk Fund 172,751 172,751 4 liabilities at the end of the Joint Venture

General Fund Reserve 23,450,894 385,000 23,065,894 3 General Reserve

Housing Loans 5,977,253 5,977,253 4 To meet future interest costs

To meet future uninsured losses and self Insurance Fund 18,299,755 200,000 529,047 18,628,802 4 insured costs

Collection Fund 2,292,000 2,292,000 0 4 Surplus on collection fund

City Centre Initiatives Fund 53,619 53,619 0 1 Committed schemes to improve City Centre

Total all General Fund Reserves 120,460,095 49,940,943 37,584,668 108,103,820

HRA General Reserve 3,950,000 1,188,000 2,762,000 4 General Reserve

PFI Reserves 34,454,327 20,020,509 21,637,614 36,071,432 4 Smoothing reserve to meet future PFI liabilities To meet possible future claims for Residual Liabilities Fund 1,530,000 1,530,000 4 environmental contamination Total all Housing Reserves 39,934,327 21,208,509 21,637,614 40,363,432

HOUSING CAPITAL Provides resources needed to maintain value of Major Repairs Allowance 6,250,008 15,347,000 9,436,151 339,159 4 housing stock

Manchester City Council Item 5(b) Executive 11 February 2009

APPENDIX 6 CONSULTATION FEEDBACK

The budget consultation process generated 22 responses (6 of these were information requests) – 4 via the budget consultation answer phone, 2 letters and 16 emails. The responses do not always state the capacity in which they are responding. However as far as such information was provided, the profile of the responders was as follows:

Residents 13 Staff 6 Associations 2 Not disclosed 1

The issues raised in the responses are summarised below:

Culture

A respondent commented on the councils investment in culture which she would like to see continue because it is effective at raising the city’s national and international profile and attracting tourists. Another respondent noted there appeared to be more spent on the Cultural Strategy team (£6.3M) than Art Galleries and Museums directly (£5.3m) and felt this was wasteful and profligate. He asks for a review into whether this is an appropriate use of revenue or to refer the issue to Overview and Scrutiny committee. He also asks for the Chief Executives budget to be reviewed with the objective of making significant savings.

Housing

A respondent accepted the council’s aspiration to improve rates of owner occupation in Manchester but hoped this was not at the expense of increasing the provision of Social housing and feels an increase in social housing should have been included in the statement of priorities. Another respondent cited a lack of affordable housing as a major concern and another had concerns that good houses less then 12 years old were being knocked down in Beswick which was a waste of money.

Green Issues/Environmental Services

Some suggestions to make Manchester a Greener City included:

The production of electricity from the City’s waterways rivers, lakes etc (Like micro plant at Heaton park) The use of wood chips for heat etc produced from the sustainable forests/woodland and stand alone trees. Specially grown willow banks on polluted land. Manchester City Council Item 5(b) Executive 11 February 2009

If the composter at the markets is not a digester could it be altered to produce methane to power/heat the area? It could take grass cuttings and supermarket waste and still make saleable garden compost. Another respondent suggested more investment in making Manchester a greener city such as planting more trees and more maintenance of parks and open spaces. It was also suggested more street cleaning is needed and streets and pavements are better maintained. Another resident felt that there is a need for intra organisational cooperation on regulation and enforcement. One resident felt recycling in the city centre is poor and is unable to get recycling facilities in her apartment block. It was suggested the council should be more receptive to approaches from willing residents to work as partners in reducing waste and responsible disposal. Another person felt there was an urgent need to make amenity sites pleasant to use and to have less and simpler services with more investigation as to how they may be helped if the public is to cooperate with recycling.

Council Tax/Efficiencies

One resident would be happy to pay more council tax provided there are noticeable improvement. He believes there should be less focus on keeping costs down and more on value for money for the services provided. Another resident suggested council tax levels could be cut by 30% by cutting spending to the basic level and charging for everything else so less is wasted and abused, ‘go for pointing the way not pushing’. He also suggested making council positions elected.

Library services

One resident agreed with the priority to replace every community library within 5 years and refurbish central library as he felt this was a strong commitment to the ‘greatest cultural asset in Manchester’. He hoped the focus would be on books rather then a technology focus, which could become redundant quickly. Another resident suggested the strategy could be slowed and extended to 10 years although he did agree replacing a library increases usage.

Customer Experience

A resident felt service access was fragmented and it was difficult to find the correct person. It was hoped the Customer strategy would provide a more streamlined service however the issue was often more with people then strategy and some council officers did not seem to view taxpayers as customers. Another respondent felt there should be a move towards citizens as contributors and cooperators and that the website should be completely redesigned with a bigger emphasis on ‘have your say’ opportunities.

Children’s Services

Manchester City Council Item 5(b) Executive 11 February 2009

A respondent felt the focus of the council was too social services orientated while schools are really the major partner. He suggested there should be a more streamlines approach to children, parents & carers and a major evaluation should take place into this issue by Ofsted and the audit commission.

Adult Social Care Advice Centre

A respondent has concerns about possible cuts in the advice centre as there would be a detrimental effect on Manchester citizens if they were unable to access advice about rights and legal information.

Nutsford Vale – Green Area

This was a specific response from the facilitator of Nutsford Vale voluntary group regarding the area becoming an official green area. They are requesting council support for a funding bid entered by Red Rose Forest to obtain external funding for maintenance of the area. It was noted this would support the councils green aims and provide a better environment for people living in Gorton South and Longsite.

Overall Priorities

A resident agreed with the investment priorities identified but felt there were some performance issues which should give weight to the priorities. Another respondent felt ‘’anti poverty’ action should be the councils major objective because poverty reduces peoples quality of life and their involvement in the community and makes Manchester less buoyant then it should be.

Others

Other issues raised were as follows:

B of the Bang is a waste of taxpayer money and should be disposed of. Council workers in the community underperforming Roadwork’s being put down and then taken back up because they were a danger to drivers – wasted money. In terms of Sports Development the emphasis should be on the community and a separate development for champions. Neighborhood funding should ensure any proposals have the support of the community and not just a small group. There should be a greater emphasis on Manchester’s equal opportunities policy There is too much expenditure on management , particularly in the housing department Issues around compulsory purchase orders due to road widening The budget consultation leaflet contained insufficient information thus made it difficult to engage in the consultation

Manchester City Council Item 5(b) Executive 11 February 2009

Requests for Further Information

The following separate requests for further information were received:

250 consultation leaflets for the Rochdale Road Residents Action Group A copy of the 2008/2009 Medium Term Financial plan was requested and sent out An officer contact name and address for Cultural Events was requested and sent out. Details of budgeted expenditure for road repairs. Details of 2007/2008 actual and 2008/2009 budget spend on Manchester Register office. Literature on the 2009/2010 plans for Libraries

Manchester City Council Item 5(c) Executive 11 February 2009 ANNEX 2

Three Year Capital Programme 2009/10 to 2011/12 (including Capital Strategy and 2008/09 capital monitoring update)

This Annex presents the three year capital programme 2009/10 to 2011/12. The capital programme aims to deliver the optimum combination of projects and programmes that represent the key priorities of the City Council’s capital strategy. Details of the capital strategy appear in Appendix D.

This report must be read in conjunction with others elsewhere on this agenda that outline capital investment proposals for the Town Hall Complex and other initiatives. Whilst the revenue consequences of those reports are covered in the revenue budget report their capital expenditure and funding implications are not included in this capital budget report. If the recommendations of the other reports are agreed they will need to be added to the capital programme.

The three year capital programme uses the most up to date forecast of outturn figures for 2008/09 as the base point for its calculation.

Formal resolutions to the following recommendations will be required if the capital investment programme is to be implemented and delivered as part of the integrated budget process presented in this report.

Members are requested to:

1. Note that the capital strategy has been updated and to agree the amended version as presented in Appendix D

2. Note that the latest estimate of capital outturn for 2008/09 is £327,621,000

3. Note the capital programme report as presented.

4. Agree that additional unsupported borrowing currently estimated to be £41,178,000 will be required to finance

Manchester City Council Item 5(c) Executive 11 February 2009 5. Recommend to the City Council for approval the three year capital programme 2009/10 to 2011/12 as presented in Appendix C, agreeing that the housing programme is subject to confirmation as to its affordability and will be the subject of a further report to Executive

6. Delegate authority to;

(b) The Head of Engineering to implement these schemes after consultation with the Executive Member for Planning and Environment on the final details and estimated costs.

10. That authority be delegated to the City Treasurer in consultation with the Executive Member for Finance and Human Resources to make alterations to the schedules for the 3 year capital programme 2009/10 to 2011/12 prior to their submission to Council for approval, • Where there exists clearer information relating to the availability of external funding resource or • Where expenditure profiles have altered, subject to no changes being made to the overall estimated total cost of each individual project

Attachments

Manchester City Council Item 5(c) Executive 11 February 2009

Appendix A Housing Programme Appendix A (i) Housing Capital Investment Table Appendix B Transport Programme Appendix C Detailed Three Year Capital Programme Appendix D Capital Strategy

Footnote – The Corporate Asset Management Plan 2009 is currently being drafted and will be presented to the Resources and Governance Overview and Scrutiny Committee in the near future.

Manchester City Council Item 5(c) Executive 11 February 2009

Background

1. The current 3 year capital programme 2008/09 to 2010/11 originally approved by the Executive in February 2008 is being implemented, subsequently enhanced by a number of amendments and additions approved by the Executive and Council throughout the year. The proposals for the new three year programme 2009/10 to 2011/12 are based on the general understanding that the current 3-year programme will continue to conclusion as planned.

2. The capital programme 2009/10 to 2011/12 will therefore be formed by the continuation of the current three-year programme plus approved new proposals that will be outlined later in this report. The figures relating to the programme continuation are based on estimates compiled during the most recent monitoring exercise. The three year programme 2009/10 to 2011/12 has been calculated on the expectation that the current year (2008/09) outturn will be £327,621,000. This figure compares with the previous forecast of £324,755,000 reported to Executive in January 2009. The increase is attributable to a combination of additional approvals agreed by the Executive in December 2008 / January 2009 £3,867,000 offset by reductions due primarily to budget adjustments and slippage from 2008/09 to 2009/10 of £1,001,000. No external funding has been lost as a consequence of these changes.

3. The estimated spending profiles in 2009/10 and 2010/11 have been reviewed to check that the original forecasts were still realistic and achievable, and where necessary amendments have been made. The three year programme has also been formulated in recognition that there are capacity constraints that could limit the size of programme that the City Council can deliver each year. (It must be appreciated that if outturn 2008/09 slips below its current predicted figure then any expenditure slipping into 2009/10 may have a “knock-on” effect and cause subsequent delay to the delivery of other projects causing corresponding slippage into 2010/11 and beyond due to these capacity constraints.)

4. Resources available for Housing, Transport and Children’s Services have been ring fenced. Proposals relating to the three year capital programmes 2009/10 to 2011/12 for Housing and the Transport local transport plan (LTP) are explained in Appendices A and B respectively. Their programmes have been formulated on the basis that the resources available are ring fenced. Members should note that Transport programme is two years only because the five year LTP finishes in March 2011 and resource allocations beyond that date have not yet been announced. The Transport Programme is estimated to be £20,920,000 in 2009/10, £19,223,000 in 2010/11, and £5,205,000 in 2011/12. The estimated Housing Programme is based on forecasts of resource availability of total resource availability £209,648,000 (£96,030,000 for 2009/10, £78,733,000 in 2010/11 and £34,885,000 in 2011/12). The precise content of the programme is under review and will be the subject of a further report to Executive. There are sufficient approvals already in place to ensure that the review will not compromise the delivery of the essential investment requirements of the current three year programme.

Manchester City Council Item 5(c) Executive 11 February 2009

Bids 2009/10 to 2011/12

5. Throughout the year service departments have submitted bids identifying capital investment requirements supporting service and budget strategies in accordance with the Gateway evaluation process to ensure that bids are strategically sound and meet corporate objectives.

6. All bids must be examined and tested to ensure that they can be delivered in terms of technical quality and that all financial implications (capital and revenue) are clearly identified and are affordable. Bids that have been fully appraised and where their funding availability is confirmed are in a position to be included in the capital budget, subject to the agreement of the Executive and the City Council. If bid appraisal is incomplete then the proposal should not seek capital budget approval, but there still exists the opportunity for members to agree that resources should be reserved in anticipation that appraisal will be completed successfully.

7. A number of bids relating to the delivery of cultural strategies were considered during last year’s process and it was agreed that £3m of resources would be reserved to provide funding over the three years 2008/09 to 2010/11. The majority of this funding provision is still uncommitted. The cultural strategy programme still requires its final prioritisation exercise to be completed and it is therefore suggested that the uncommitted resources remain reserved to provide funding for the top priority projects.

8. The evaluation process is supplemented by final detailed scrutiny for (a) the impact of the associated VAT on the Council’s overall finances and (b) a confirmation of capital and revenue affordability at capital expenditure approval stage - the final clearance stage immediately prior to scheme implementation.

Treatment of Resources

9. The total amount of resources that are expected during the three years 2009/10 to 2011/12 has been calculated. The national economic downturn has had significant impact on the resources available for the capital programme (a) The original forecast amount of usable capital receipts available to the City Council has reduced. This is attributable to a reduced demand for sites, resulting in forecast receipts slipping to later years. The reduced demand for sites also contributes to reductions in site values generally. (b) The City Council has taken measures to minimise the reduction in capital receipts by reviewing the capital disposals strategy, so that only essential sales and ones that represent best value are completed. This has resulted in the disposal timetable for a number of large sites being re-scheduled into future years in the expectation of market recovery and increased land sale receipts. (c) The revenue budget contains sufficient provision to cover the required level of unsupported borrowing to finance the shortfall created by the reduced resources and for the proposals requiring City Council resources proposed elsewhere in this report

Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Programme 2009/10 to 2011/12

10. After financing existing commitments from the current programme there remains a funding shortfall (non housing) of £16,497,000. The proposals in this report to commit additional projects and to reserve more resources will increase the funding shortfall further.

11. Capital investment may be required for a number of developing initiatives. Further detail is required before individual proposals can be reported back to the Executive. Whilst every effort will be made to maximise external funding there are likely to be requirements for the City Council to provide capital funding and as a consequence the City Council may need to reserve resources £11m for the following projects – Neighbourhood Funding Strategy, Customer Relationship Management, Corporate Contact Centre, Miles Platting Joint Service Centre Infrastructure. It should also be noted that resources reserved last year for projects not yet commenced - Irwell City Park and the unallocated element of the global provision for investment on cultural strategy priorities are still in place.

12. The continuation of current capital programme strategy will require the following levels of capital investment

(a) Settlement of outstanding liabilities relating to old CPO’s £30,000 for each of the three years 2009/10 to 2011/12 (b) Disabled employees equipment & adaptations 2011/12 £30,000 (c) Disabled access grants 2011/12 £145,000 (d) Demolition of buildings 2011/12 £50,000 (e) Ongoing IT infrastructure investment 2011/12 £500,000 (f) Continuation of the AMP repairs programme 2011/12 £10,000,000

13. A combination of capital allocations and grant earmarked by Government for schools £29,975,000 in 2011/12 will be applied as follows :

(a) Primary rebuilding programme - £16,989,000 (b) Devolved Capital Grant £5,402,000 (c) Schools Access initiative £677,000 (d) Manchester Partnership Programme £4,500,000 in 2008/09 (e) Extended services for schools £543,000 (f) ICT Harnessing Technology £1,864,000

14. The following list of projects represents the other corporate priorities that will require funding from Council capital resources and are recommended to be included in the new three year programme.

(a) Increased CPO and other costs relating to Cheetham District Centre £1,250,000 in 2009/10 (b) Asbestos removal various premises in 2009/10 £100,000 (c) Single Point of Failure £1,516,000 in 2009/10 to provide ICT investment to address the serious risk to Council business by computer “down time”.

Manchester City Council Item 5(c) Executive 11 February 2009 (d) Additional support from Capital Fund funding towards City Centre Public Realm (inc Mosley Street) £2,000,000 in 2010/11. This is in accordance with the City Council’s strategy for continued public realm investment to enhance Manchester’s ability to attract businesses to locate to the City as agreed by the Executive in December 2008.

15. There are certain types of proposals that require capital expenditure funded from unsupported borrowing, where the cost of borrowing (interest and provision for loan repayment) will be recovered by revenue budget savings and / or additional income generated. Thus these projects can be delivered at net nil cost to the City Council. There is one such project for which capital budget approval is requested for 2011/12:

• Pavement repairs £2,669,000

16. It is recognised that further “spend to save” investment opportunities may arise and in order to deliver these types of projects it is recommended that delegated authority is given to the City Treasurer, in consultation with the Executive Member for Finance and Human Resources to increase the capital budget accordingly. The extent of this delegation should be limited to a total of £5,000,000 in 2009/10 and £5,000,000 per year in the two subsequent years. This is on the understanding that the costs of borrowing (interest and principal) of any such additions to the capital budget are financed in full by additional income / revenue budget savings.

The proposals contained in this report would create a three year capital programme of £364,146,000 in 2009/10, £303,156,000 in 2010/11, and £121,020,000 in 2011/12, if approved. A summary of estimated spend by department is contained at the front of Appendix C followed by schedules containing individual scheme details.

17. Work is continuing to produce the best estimate of figures for the three years 2009/10 to 2011/12. This will include the effect on 2009/10 and future years of any changes in the delivery of the current 3 year programme 2008/09 to 2010/11. If changes to figures in 2008/09 are identified in the current year’s monitoring processes these will need to be fed into the new 3 year programme schedules. Any such changes should simply be re-profiling between financial years with no overall change to the estimated total cost of any individual project, or amendments where clearer information has become available relating to the availability of external funding sources. Members are requested to agree that authority be delegated to the City Treasurer, in consultation with the Executive Member for Finance and Human Resources to continue to make such alterations after this report to Executive to enable the best set of figures to be presented to full Council in March.

Manchester City Council Item 5(c) Executive 11 February 2009

Conclusions

18. Approval of the recommendations contained in this Annex will authorise the capital programme detailed in Appendix C, plus reserved resources.

19. The latest forecast of funding shortfalls in the current three year programme and the proposed additions (including reserved resources) that require City Council resources indicates a requirement for additional unsupported borrowing £41,178,000 to be financed from existing revenue budget provision.

20. The estimated funding profile for the financial year 2009/10 is as follows:

£000

Supported Borrowing 39,687 Unsupported Borrowing 13,378 Grants 248,779 Contributions 3,628 Capital Fund 9,327 Revenue 16,847 Capital Receipts 32,500

Total 364,146

Manchester City Council Item 5(c) Executive 11 February 2009 APPENDIX A

HOUSING INVESTMENT PROGRAMME 2009/10 to 2011/12

The level of available resources sets the financial limits for the final expenditure programme. The latest Housing resource availability forecast 2009/10 to 2011/12 as reported to the Housing Investment Board (HIB) is £209.648m analysed by financial year in the table below. A more detailed analysis is shown in Appendix A (i).

2009/10 2010/11 2011/12 Total £000 £000 £000 £000

Resource Availability 96,030 78,733 34,885 209,648

The resources estimates are still under review, in particular capital receipts forecasts for the three years 2009/10 to 2011/12. There is a risk that some capital receipts could slip into 2012/13 and later years.

If the whole programme is approved there will be significant commitments beyond 2011/12. This is attributable to the future contractual commitments to complete the land assembly programmes for the Collyhurst and Brunswick PFI’s in particular. The longer term commitments require assumptions about the levels of resources that might be available beyond the current 3 year programme. The ability to fund the Housing capital programme would depend heavily on Regional Housing Pot resources (or equivalent) maintaining current forecast amounts of circa £14m per year up to and including 2013/14 and for a further £11.9m to cover commitments in 2014/15.

Further work is also needed to prioritise the spending proposals. A whole budget review is in progress and the completion of this exercise will then provide the information required to outline the capital spending options that remain to bring expenditure plans in line with resource availability. Whilst the programme is already constrained by limited resources it is essential to ensure that all spending requirements (including any further land assembly programmes) over the three year budget period have been identified. It might be necessary also to consider if a contingency for emerging priorities not yet identified should be incorporated in the final programme.

The current three year programme is already contractually committed to a significant value of projects (approx £84m) and further works packages (£67m) will commence so that the ongoing programme delivery for 2009/10 can continue without impediment and the budget review will be conducted with this principle in mind.

Manchester City Council Item 5(c) Executive 11 February 2009 It is therefore not possible to present the detail of the expenditure programme to this meeting. A further report will be submitted to Executive as soon as possible by which time it is expected that a detailed capital programme will be available for consideration and agreement.

Details on contractual commitments and new work packages are summarised below.

Contractual Commitments

As mentioned above there are £84m of contractually committed works to be completed within the 2009/12 capital programme period. These are summarised, as follows:

Works to the retained Housing Stock - £1.1m.

Residual works to communal areas of multi-storey blocks, residual boiler replacement works and other pre-stock transfer related expenditure in East Manchester.

Works to Manchester’s ALMO, (Northwards) - £14.4m.

Replacement window programme in Charlestown, Cheetham, Higher Blackley, Moston and Newton Heath wards, totalling £2.8m.

External works in Higher Blackley totalling £0.2m.

Kitchen and bathroom replacement in Charlestown, Cheetham, Higher Blackley, Moston and Newton Heath, totalling £9.9m.

Committed environmental projects and thermal insulation works to the Moston Corolite properties, totalling £1.5m.

Housing Market Renewal - £46.6m.

Acquisition, relocation and demolition works, associated with site assembly, (CPO), programmes, totalling £41.4m.

Facelift, security and environmental commitments, totalling £5.2m.

PFI Programme - £21.9m.

Acquisition of residential and commercial properties; council tenant relocation and homeloss; and ‘tying in’ works to former Right to Buy properties, within Miles Platting PFI.

New work packages, to commence in 2009/10.

As mentioned above, there are £67m of further works packages, to commence in 2009/10, to ensure that ongoing programme delivery can occur. This includes £9.198m for the Brunswick PFI project which will be spent between 2012 and 2014. These are summarised as follows:

Manchester City Council Item 5(c) Executive 11 February 2009

PFI Programme - £15.337m.

Brunswick PFI will require support for the acquisition of residential and commercial properties; council tenant homeloss and relocation; and 'tying in' works to former Right to Buy properties. These capital requirements will be met from within Housing’s Capital resources, however, as the sources of funding are only approved on an annual basis this estimation will necessarily have to be revisited annually. The funding profile, for approval is as follows:

2009/10 2010/11 2011/12 Future £2.151m £0.165m £3.823m £9.198m

Works to the retained housing stock - £3.654m.

There will be a continuing need to invest in council housing until it’s future is resolved through transfer or PFI. This investment will deliver equipment and adaptations for residents; obsolete boiler replacements; lift replacements within sheltered accommodation; and other pre-transfer related activity.

2009/10 2010/11 2011/12 £3.654m £0m £0m

Achieving the decent homes standard in Manchester’s ALMO, (Northwards) - £38.857m.

Northwards Housing will be commencing the fourth year of the £201m programme to achieve the decent homes standard, with total investment over the next three years anticipated to be:

2009/10 2010/11 2011/12 £18.894m £18.386m £1.577m

Access to Affordable Housing and Housing Market Renewal - £3.492m

Housing Market Renewal and Regional Housing Pot resources are directed to achieving decent affordable homes within the private sector, through the market restructuring programme. The investment will be:

2009/10 2010/11 2011/12 £3.492m £0m £0m

Manchester City Council Item 5(c) Executive 11 February 2009 Equipment and adaptations - £4.448m.

The Housing Capital Programme provides adaptations to owner occupied homes, those managed by registered social landlords and within the private rented sector, through Disabled Facilities Grants, providing support for individuals in their own homes and increasing the stock of adapted properties (the budget for equipment and adaptations for Council tenants is included under the heading “ Works to the retained housing stock” on the previous page.

2009/10 2010/11 2011/12 £4.448m £0m £0m

Grant and Loans Assistance - £1.220m

Energy Efficiency works and loan products to owner-occupiers for home improvements to address fuel poverty and meet decent homes standards.

2009/10 2010/11 2011/12 £1.220m £0m £0m

A report outlining full proposals for the Housing capital investment programme will be submitted to the Executive as soon as possible.

Manchester City Council Item 5(c) Executive 11 February 2009 Appendix A (i) Housing Capital Investment

Total Housing Capital Programme Resources 2009/10 to 2013/14

PROPOSED PROPOSED PROPOSED PROPOSED 2009/10 2010/11 2011/12 3 YR TOTAL TOTAL TOTAL TOTAL £m £m £m £m

Supported Capital Expenditure 2.540 1.968 0.000 4.508 Regional Housing Pot Grant 13.837 13.837 14.000 41.674 Major Repairs Allowance (annual allowance) 8.321 8.957 7.492 24.770 Major Repairs Allowance (reserve) 7.026 1.000 0.000 8.026 Capital Receipts 10.902 6.210 2.199 19.311 Almo Funding 16.346 13.710 8.000 38.056 Housing Market Renewal Grant 28.489 26.992 0.000 55.481 HMR and RHP ringfenced receipts 5.740 3.375 0.525 9.640 Disabled Facilities Grant 2.669 2.669 2.669 8.007 Utilities funding / PCT Energy Efficiency 0.100 0.000 0.000 0.100 Utilities funding -Decent Homes 0.060 0.015 0.000 0.075

Total Anticipated Resources 96.030 78.733 34.885 209.648

Manchester City Council Item 5(c) Executive 11 February 2009 APPENDIX B

TRANSPORT CAPITAL PROGRAMME

Transport Services (Regeneration) – 2009/10-2011/12 Local Transport Plan and other Highway Capital Funding Requirements

(Reference: Transport Services Regeneration Business Plan 2009/10 – 2011/12)

1.0 Introduction and Background

The City Council wants Manchester to have a transport system equal of the best in Europe. An effective transport system is a pre-condition of continued economic growth, the continuation of our transformation agenda and to securing the social and environmental well being of the City. The provision of transport has tremendous impact on the communities of Manchester. Well planned transport services contribute to the achievement of successful communities, healthier residents, more equality and social inclusion, sustainability and better local economies.

Manchester’s transport strategy, policy framework and indicative investment programmes are set out in the Second Greater Manchester Local Transport Plan (LTP2) for the 5 year period 2006 – 2011. This document outlines the approach to transport planning being taken by the ten District Local Authorities and the Greater Manchester Passenger Transport Authority. LTP2 builds on the First LTP period (2001-2006) and the longer-term vision set out in the Greater Manchester Integrated Transport Strategy (GMITS).

In the light of the outcome on TIF there is a need to revisit plans and the time scales for major infrastructure improvements working with other AGMA authorities to review the options available to secure the investment to fund elements of the proposals. This review which is now in hand will take into account the availability of regional funding streams and other forms of locally generated capital and the LTP.

Nonetheless, the transport agenda over the next three years is one that creates opportunities, not least through the Local Transport Act, Community Strategy/Local Area Agreement and the creation of our new Local Development Framework. The opportunities that Manchester must seize on relate to: • better delivery to customers of transport services • better planning and resourcing of future transport • the opportunity to better capitalise on the chance to take more control of decision-making in transport.

At the centre of improving service to customers across the community is the outcome of the work of the Highways Service Improvement Project. This project brings with it both a series of efficiency savings and a better focus on the customer and customer

Manchester City Council Item 5(c) Executive 11 February 2009 service. Members of the public, as well as Councillors and internal clients will, from March 2009, have a single point of contact when dealing with a host of highways issues ranging from roads maintenance to promoting new works. The new customer- focussed team will be complemented by new client and network operations and works delivery functions which will be developed in 2009/10. The aim is to continue to develop the newly established joined-up service for all highway matters leading to better management and investment decisions in relation to the way that Manchester’s highway assets contribute to the Council’s Community Strategy.

2.0 Key Issues

Delivery of the Local Transport Plan 2 (2006/07 – 2011/12) is at the heart of much of the work of the transport services team. An annual survey is carried out to review whether Manchester is on track in delivering against this plan – this year’s review, which is nearing completion, suggests the following priorities for 2009/10:

• Building on the success of recent years, further reducing the number of casualties and fatalities associated with road traffic incidents. This links to the Community Strategy and Corporate Plan priorities and in particular travel planning work and the implementation of the ‘safe routes to school’ programme • Continuing to support a range of measures, which encourage a higher proportion of journeys to be made by public transport, on foot or by bike. Whilst this has an obvious impact on road congestion it also has a major impact on the environment – and takes its place in the “greening the city” agenda • Supporting physical improvements to local centres and neighbourhoods – enhancing the sense of community well-being and cohesiveness that is a key theme in the Community Strategy • Improving the way in which we monitor against plan delivery and set in place remedial actions where we are falling short of our targets To achieve its transport objectives Manchester will work with other AGMA authorities, including the Greater Manchester Passenger Transport Authority and key business and community stakeholders to deliver the Manchester elements of an innovative, regeneration driven, transport strategy for the wider Manchester City region. This will include working with local communities and agencies to support their regeneration and the creation of sustainable neighbourhoods where people choose to live.

Regional Centre Transport Strategy (RCTS)

Whilst the current transport infrastructure supports the economy of the City and local people’s access to work, education, shopping, health, leisure and cultural facilities, there is an urgent requirement for higher and sustained levels of investment if our transport network is not to constrain growth of the City and the well-being of its people. In spite of the recent economic downturn the Regional Centre is still expected to experience significant employment growth over the next 15 – 20 years.

The transport proposals set out in the Regional Centre Transport Strategy will need to meet the demand for forecast changes in trips patterns. The continuing success of the Regional Centre is critical to addressing the long-standing challenges of social

Manchester City Council Item 5(c) Executive 11 February 2009 exclusion faced by many Manchester residents, in particular those in the inner areas immediately on its periphery. The challenge is to translate the sustained economic growth and competitiveness of the Regional Centre into real quality of life benefits for all residents and users.

Again, in light of the decision on TIF a review will be undertaken to assess RCTS proposals and which priorities can be realistically funded and taken forward.

Key issues include:

Public Transport: More public transport capacity is needed on all modes to support the City’s growth. There is also a need for a greater degree of control over local bus services to ensure that they play their full part in meeting future transport needs. Connectivity must be improved to support labour movement and promote accessibility. Our challenge is to support measures that encourage a higher proportion of journeys to be made by public transport, (on foot and by bike) thereby making a contribution to reducing congestion, improving air quality and reducing carbon emissions.

Local Public Service Agreement: Manchester has signed a Local Public Service Agreement (LPSA 2 Target 11) with Government which commits us to achieving a 3.6 percentage point increase in the share of trips which access the city centre in the morning peak by means other than the private car.

Accessibility : The local public transport network needs to provide good access for people across the city. An important priority is to work with the PTA to address problems of transport related social exclusion and to work to develop a transport system which provides good connections to employment, education, healthcare, fresh food and leisure facilities.

Traffic Management: In parallel with improvements to mass transit services, the demand for and use of congested sections of the strategic highway network needs to be proactively managed during the times that they are congested to maximise the capacity for safe journeys by all users. There is a need to maximise the use of the existing infrastructure and make efficient use of the available capacity.

Local Service Improvements: Local centres and service clusters need improved access for walking, cycling, community transport and car parking to encourage use of local services. Improving linkages and permeability will help drive our regeneration objectives for local districts.

Casualty Reduction : In common with other urban centres, Manchester has a high number of road traffic casualties. Strategies are in place to reduce the numbers of casualties, particularly at busy junctions, high streets and on school journeys. These need to be continually monitored and enhanced. Our target is to reduce the total number of people killed and seriously injured on Manchester’s roads by 50% by 2010 compared with the average position between 1994/98 and reduce the number of children killed or seriously injured by 55% over the same period.

Manchester City Council Item 5(c) Executive 11 February 2009 Local Environment : The environmental quality of centres and neighbourhoods needs enhancing through good design, high quality lighting, maintenance and management of urban spaces (parks, squares, open spaces, streets, waterways) and the encouragement of non-car modes of transport to improve air and noise quality.

Smarter Travel: In addition to improved levels of service provision there is also a need to improve the level of information provided to the public to enable smarter travel choices to be made and to improve customer satisfaction with transport services. Changing travel behaviour will contribute to ease the congestion that results from our peak journey to schools and the workplace.

School Travel Plans/Safer routes To School: School Travel Plans (STPs) / Safer Routes to Schools (SRTS) are funded by either (or both) the LTP2 and the Neighbourhood Renewal Fund (NRF). The STP / SRTS programmes aim to create networks of safer walking and cycling routes throughout school catchment areas and achieve: improving children’s safety on their journey to school; encouraging modal shift; reducing traffic; reducing congestion; reducing pollution, and encouraging a healthy lifestyle.

3.0 Funding

Manchester’s targeted objectives, at national, regional and local levels are intrinsically linked with the approved Transport Services Regeneration Business Plan (2009/10 – 2011/12), the 2 nd Local Transport Plan and Local Public Service Agreements. The emergence of Local Area Agreements as the expression of local vision and priorities set out in the Community Strategy will include transport indicators from the Local Transport Plan. Local transport capital block allocations will continue to be part of the single capital pot, paid directly from the Department for Transport, and authorities have flexibility about how to invest them across the full range of their responsibilities.

The 2nd Local Transport Plan runs up to 2011 for which the approved funding is as outlined in 3.1 below.

Manchester City Council Item 5(c) Executive 11 February 2009 3.1 Summary of Transport Funding

Summary of Headline Priorities Proposed 2009/2010 2010/11 (Reference: Transport Services Funding Source Regeneration Business Plan (2009/11) 2009/10 – 2011/12 – Priorities for Improvement) 1. Public transport led strategy to Department for 3,162 3,356 include walking and cycling to Transport - Local deliver people along corridors to Transport Capital the City Centre, the Airport, the Settlement 2008/11 Universities (Knowledge Capital) and other areas of economic activity and to manage the demand for travel on congested corridors at peak times with specific consideration for agreed national, regional and Manchester’s own targets. 2. Reducing casualties from road Department for 1,700 1,800 traffic collisions is a continuing Transport - Local high priority. Programmed Transport Capital interventions include physical Settlement 2008/11 improvements at casualty hot spot locations, training children to safely use the highway and targeting road safety campaigns at key audiences 3. South East Manchester Multi Department for 1,503 1,504 Modal Transport - Local Strategy (SEMMMS) targeted Transport Capital interventions to improve access to Settlement 2008/11 primary and secondary service (SEMMMS) clusters (local centres) by non-car modes, improve social inclusion and increasing the number of people cycling and walking.

4. Maintenance of highway assets Department for 4,256 (+ 4,894 including bridges to be fit for Transport - Local 1.092m PRN purpose is a priority. This includes Transport Capital Bridge reconstructing footways to Settlement 2008/11 strengthening minimise trip hazards, increasing (Structural resources to prevent further Maintenance) deterioration of carriageways and the strengthening and maintenance of bridges to agreed standards

Manchester City Council Item 5(c) Executive 11 February 2009

3.2 Summary of Transport Funding: -

3.2.1 Total Department for Transport - Local Transport Capital Settlement 2009/11 2009/10 2010/11 £000 £000 Minor Works 4,862 5,156 SEMMMS 1,503 1,504 Maintenance 4,256 4,894 PRN Bridge Strengthening scheme 1,092 Total 11,713 11,554

3.2.2 Non LTP Transport Pavement Repairs (Spend to Save) 2,669 2,669 Urban Traffic Control 3,000 3,000 City Centre Public Realm – Metrolink 2,680 2,000 3.2.3 Total Transport 20,062 19,223

These allocations do not reflect the most recent changes – increases and slippage figures – January increases plus £682,000 has slipped from 2008/09 into 2009/10 – as reported in the main body of the report and as detailed within the Transport Section of Appendix C.

Manchester City Council Item 5(c) Executive 11 February 2009

Appendix C Proposed Capital Budget 2009/10 to 2011/12

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Housing 118,278 96,030 78,733 34,885 209,648 Transport 25,557 20,920 19,223 5,205 45,348 Education 107,761 186,399 186,712 70,175 443,286 ASC 9,119 5,700 1,240 0 6,940 CSC 2,577 4,860 2,771 0 7,631

EPCS: Chief Executives' 24,233 19,660 3,389 0 23,049 Corporate Services 32,492 23,394 10,172 10,755 44,321 Environment & Operations 2,764 3,107 0 0 3,107 Libraries & Theatres 1,706 3,667 916 0 4,583 Manchester Galleries 17 235 0 0 235 Manchester Leisure 1,795 174 0 0 174 Trading Services 1,322 0 0 0 0

TOTALS 327,621 364,146 303,156 121,020 0 788,322 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

1 HOUSING PROGRAMME 118,278 96,030 78,733 34,885 209,648

TRANSPORT

Commitments Transport Programmes - LTP: 2 Integrated Transport Measures (Minor Works) 4,149 5,362 5,156 10,518 3 Bridges Assessment and Strengthening 1,312 4 Primary Route Network - Bridge Strengthening 350 1,092 1,092 5 Strategic Road and Footway Maintenance 3,298 4,256 4,894 9,150 6 South East Manchester Multi Modal Study (SEMMMS) 1,816 1,703 1,504 3,207

Transport Programmes - Non LTP: 7 Pavement Repairs Rolling Programme 2,659 2,669 2,669 5,338 8 Quality Bus Corridor Top Slice 350 9 Quality Bus Corridor - SEMMMS 1,534 10 Urban Traffic Control 3,000 3,000 3,000 2,536 8,536 11 City Centre Signage Programme 250 12 Sense of Place 657 13 Shudehill Transport Interchange 5,000 14 Northern Orbitan Quality Bus Corridor 80 15 Ardwick Residents Parking Scheme 78 16 Safer Routes to Schools 647 17 Errwood Road Cycle Track 20 18 Central Park Transport Gateway 11 19 Manchester & Salford Inner Relief Route 20 20 Rusholme Road Safety Initiatives 6 21 City Centre Public Realm - Metrolink 320 2,680 2,680 22 Wilbraham Safer Routes to Schools 52 52

Commitments sub-total 25,557 20,814 17,223 2,536 40,573

New Bids 23 Styal Road / Simonsway Junction Improvements 106 106 24 Pavement Repairs Rolling Programme 2,669 2,669 25 Public Realm City Centre - Metrolink 2,000 2,000

New Bids sub-total 106 2,000 2,669 4,775

Total Transport 25,557 20,920 19,223 5,205 45,348 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

EDUCATION

Commitments Schools Major Building Programmes & Projects: 26 Green End Primary - Site Consolidation 18 27 Haveley Hey Replacement School 22 28 Medlock Primary - Replacement school 675 29 Primary Review Option Appraisal 24

Primary Schools Rebuilding Programme: 30 Newall Green Primary School Remodelling 43 31 St Agnes Primary - New School 4,662 421 421 32 St.Thomas Primary - New School 4,792 1,694 1,694 33 Brookburn Primary - Extensions & Alterations 2,553 405 405 34 Parkview Primary - New School 916 6,158 6,158 35 Acacias Primary - New School 1,900 4,300 6,200 36 Pike Fold Primary - New School 100 300 3,600 3,900 37 Varna Street Primary - New School 200 833 2,467 3,300 38 Old Moat Primary - New School 500 5,900 6,400 39 Ashgate Primary 3,500 3,500 40 Maine Road - Pathfinder 4,350 2,180 2,180 41 Projects still under consideration 1,152 3,141 4,293 Subtotal Primary Schools Rebuilding 17,616 15,543 22,908 38,451

42 Building Schools for the Future (BSF) - Phase 1: 30,149 47,346 3,650 81,145 43 Gorton Education Village 2,332 44 Newall Green High School 5,059 45 St.Paul's RC High School & Piper Hill SEN 9,052 46 Higher Blackley Education Village 12,628 47 St.Matthew's RC High School 10,615 48 Further resources including the following projects: 2,589 210 210 49 King David High School 826 4,773 1,582 6,355 50 Southern Cross SEN 50 450 450 51 Abraham Moss High School 100 1,400 1,400 52 Levenshulme High School & Grange SEN 200 1,300 1,300 53 Burnage High School 3,277 54 Buglawton SEN 3,123 4,721 4,721 55 Castlefield SEN 1,156 1,282 1,282 56 Wright Robinson PFI 550 57 Wave 1 ICT Expenditure 2,450 58 Temporary VAT provision 5,000 Subtotal BSF Phase 1 59,007 44,285 48,928 3,650 96,863 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

59 BSF Academies - resources for the following projects: 11,639 81,347 67,278 148,625 Manchester Health Academy East Manchester Academy Creative and Media Academies Manchester Enterprise Academy The Co-operative Academy of Manchester Communication Academy NEM Academy - remediation works (trfd back from NEM from the £8m) Academies ICT expenditure

60 BSF Phase 2 - resources for the following projects: 300 26,121 35,900 31,350 93,371 Whalley Range 11 - 18 High School Loreto High School Trinity C.of E. High School The Barlow R.C. High School & Specialist College St.Peter's R.C. High School Parrswood High School (ICT) Chorlton High School (ICT) Buglawton Hall School Ewing School Lancasterian School Grange School

Sub-Total all BSF 70,946 151,753 152,106 35,000 338,859

Manchester Partnership Programme - Schools Refurbishment Works: 61 Mechanical 12 62 Roof Works 191 63 Windows, Doors and Refurbishments 82 64 Extensions 800 Various Other Refurbishments / projects still under 3,911 4,000 3,500 7,500 65 consideration Subtotal MPP Schools Refurbishments 4,996 4,000 3,500 7,500

Other Projects - 66 Burnage High School - Support for Arts College 80 67 Mellands High School - Multi Media 120 68 Ghyll Head - Sports Facilities 15 69 Piper Hill - Specialist Colleges 20 St.Matthews City Learning Centre - Broadcast Quality 202 70 TV Studio Parrswood HS - Multiple Physical Disabilites Learning 39 71 Area 72 Newall Green High School 6th Form Centre 2,392 1,708 1,708 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Other Programmes - 73 Computers for Pupils 1,434 74 Children's Services - Multi Agency Projects 150 3,850 3,850 75 Schools Devolved Capital 4,802 5,043 5,114 5,200 15,357 76 Seed Challenge 80 77 School Travel Plan Programme 40 14 14 78 Schools Access Initiative 677 677 1,354 79 Extended Services for Schools 362 1,606 543 2,149 80 ICT Harnessing Technology Grant 1,390 1,583 1,864 3,447 81 Other ICT 2,330 82 Lea Liability 8 Computers for Pupils - home access for hard to reach 224 224 83 pupils

Commitments sub-total 107,761 186,001 186,712 40,200 412,913

New Bids Gorton Education Village Artificial Playing Surface (BSF 250 250 84 Phase 1) Higher Blackley Education Village All Weather Pitch 148 148 85 (BSF Phase 1) 86 Primary Schools Rebuilding programme 16,989 16,989 87 Devolved Capital for Secondary Schools 5,402 5,402 88 Schools Access Initiative 677 677 89 Extended Services for Schools 543 543 90 ICT Harnessing Technology Grant 1,864 1,864 91 Manchester Partnership Programme 4,500 4,500

New Bids sub-total 398 29,975 30,373

Total Education 107,761 186,399 186,712 70,175 443,286 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

ADULT SOCIAL CARE

Commitments 92 Mental Health Support Programme 83 93 Learning Disability Network - Adaptations to Homes 81 94 Grants to Improve Care Home Environment 5 95 Demolition of Waverley, Fairholme and Eastcliffe 97 96 Manchester Care Homes to CiC 7,453 97 Whitebeck Court Extra Care Scheme 1,400 5,600 1,240 6,840

Commitments sub-total 9,119 5,600 1,240 6,840

New Bids 98 Asbestos Removal - various premises 100 100

New Bids sub-total 100 100

Totals Adult Social Care 9,119 5,700 1,240 6,940

CHILDREN'S SOCIAL CARE

Commitments 99 Sure Start Children's Centres - Phase 3 696 919 592 1,511 Early Years and Play building improvements (Quality 879 3,941 2,179 6,120 100 and Access for all young children) 101 Information System for Parents and Providers (ISPP) 33

Other Programmes/Projects: 102 Children's Homes 162 103 Youth Facilities - Youth Capital Fund Plus 452 104 Alternative Residential and Family Unit Accommodation 40 105 Mobile Flexible Working - Mobile PCs 315

Commitments sub-total 2,577 4,860 2,771 0 0 7,631 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Total Children's Social Care 2,577 4,860 2,771 7,631 EPCS:

Chief Executive's:

Commitments 106 New East Manchester Programme 20,265 14,179 3,025 17,204

Beacons Programme: 107 The Roundhouse 344 108 Environmental Projects and Campaigns 37 20 20 109 Improving Access to Local Services 7 110 Construction Training Centre 121

North Manchester: 111 Cheetham District Centre 233 1,250 1,250

South Manchester: 112 Wythenshawe Forum Regeneration Project 80 33 33 113 Burnage Environmental Improvements Phase 2 381 114 Kerscott Road Access and Security 9 115 Victoria Baths Restoration Phase 1 1,382 430 430 116 Maine Road Redevelopment 569 1,100 1,100 117 Longsight District Centre - Improvements Phase 2 1 118 Wythenshawe Neighbourhood Centres Regeneration 66 119 BMX Site - Hulme Park 47 2 2 120 Hemmons Road Estate - Streetscape Improvements 34 121 St. Phillips, Hulme - Tree Planting 40 23 23 122 Range Road Environmental Imp Works 15

Other Projects: 123 Disabled Access Grants 250 130 145 275 124 Band On The Wall 231 200 200 125 Stadium 71 126 Oxford Road Digitisation (fibre optic cabling) 50 250 187 437 127 Oxford Road Public Realm Improvements 0 1,688 30 1,718

Commitments sub-total 24,233 19,303 3,389 22,692

New Bids 128 Victoria Baths Restoration - additional works 357 357

New Bids sub-total 357 357

Total Chief Executive's 24,233 19,660 3,389 23,049 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Corporate Services:

Commitments General- 129 Demolition of Unsafe Buildings 42 130 Strategic Acquisitions - South Manchester 2,646 131 Daisy Mill Improvements - Substation 500 132 Manchester Central 10,750 6,250 6,250 133 Fairholme Showman Site 275 134 Ardwick West - Rondin Road 50 Alpha House, Wythenshawe - Office Accommodation for 4,100 135 relocated staff from Fujitsu and other sites.

Programmes- 136 Disabled Access for Employees - Aids and Adaptations 56 30 30 60 137 IT - Ongoing Infrastructure Investment Programme 533 462 500 962 138 Micare (MIP) 545 35 35 139 Town Hall Service Centre (MIP) 1,350 1,350 140 Town Hall Complex 250 141 Corporate Asset Management and DDA Works 10,260 10,750 9,582 20,332 142 Ongoing Liabilities of Completed CPOs 30 30 30 60 143 Sustainability Initiatives 2,000 144 Daisy Works Refurbishment 454 145 Acquisition of The Hive, Lever St, Mcr 2,941 2,941 146 Project Management Collaboration System 1

Commitments sub-total 32,492 21,848 10,142 0 0 31,990

New Bids 147 Settlement of Old CPOs 30 30 30 90 148 Disabled employees - equipment and adaptations 30 30 149 Disabled access grants 145 145 150 Ongoing IT infrastructure investment 500 500 151 Continuation of AMP 10,000 10,000 152 Demolition of buildings 50 50 153 Single Point of Failure - ICT 1,516 1,516

New Bids sub-total 0 1,546 30 10,755 0 12,331

Total Corporate Services 32,492 23,394 10,172 10,755 44,321 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Environment & Operations

Commitments 154 Relocation of Vehicle Pound, Ardwick to Hooper Street 203 155 Emergency Control Room 220 220 156 Blackley Cemetery Drainage 425 157 Pavilion Green Roof Piccadilly Gardens 50 127 127 158 Relocations within Longley Lane Waste Management 450 159 Mercury Abatement Phase 1 334 160 Mobile Working in Regulatory & Enforcement (MIP) 254 161 CCTV Bus Lane Enforcement 40 162 Gorton Cemetery Chapels demolition 8 163 Waste and Recycling Improvments 1,000 2,760 2,760

Commitments sub-total 2,764 3,107 3,107

Total Environment & Operations 2,764 3,107 3,107

Libraries and Theatres:

Commitments General- 164 Longsight Library Refurbishment 376 1,938 1,938 165 New Beswick and Brookway Libraries 250 1,725 900 2,625 166 Miles Platting Library & Local Centre 5 167 The Powerhouse library refurbishment 1,075 4 16 20

Commitments sub-total 1,706 3,667 916 4,583

Total Libraries & Theatres 1,706 3,667 916 4,583

Manchester City Galleries:

Commitments International Centre for Excellence in Fashion and 100 100 168 Textiles (ICEFT) Feasibility Study 169 Manchester Art Gallery 17 135 135

Commitments sub-total 17 235 235

Total Mcr City Galleries 17 235 235 Manchester City Council Item 5(c) Executive 11 February 2009 Proposed Capital Budget 2009/10 to 2011/12 Appendix C

Memo Only Reference Forecast 2009/10 2010/11 2011/12 Future Total Number Programme / Project Spend Years Spend Ward 2008/09 £000 £000 £000 £000 £000 £000

Manchester Leisure:

Commitments 170 Diseased Manchester Poplars - Felling/Replacement 149 171 Marie Louise Gardens Refurbishment 160 172 Velodrome Programme - Track Replacement 73 173 Alexandra Park Heritage Refurbishment and Restoration 90 174 Heaton Park Phase 2 Regeneration 6 175 Heaton Park Phase 3 (Heaton Hall Regeneration) 88 176 Lindsay Road Allotments Replacement 24 177 Woodhouse Park Replace Community/Youth Facility 162 178 Wythenshawe Park - Park Heritage Exhibition (Phase 1) 33 179 Gorton Baths Demolition 20 Heaton Park & Boggart Hole Clough - Playground 17 180 Provision 181 Sports Pavilion Refurbishment City Wide 30 182 Tennis Courts City Wide 2006/07 21 183 Children's Playgrounds Programme 2007/08 120 184 Fencing, Infrastructure CCTV (perception of crime) 19 185 Hollyhedge Park Skateboard Facility 45 186 Major Events Scoreboard 120 187 Platt Fields BMX 326 188 Gorton Park Skateboarding 35 189 Bignor Street - new Multi Use Games Area 140 Velodrome - replacement emergency lighting batteries 23 190 and lift repairs (virement from AMP) 191 Hazeldine Road Allotments - drainage works 30 192 Cheetham Parks (s106) 39 39 39 193 Hough End Improvement Scheme 25 135 135 Commitments sub-total 1,795 174 174

Total Manchester Leisure 1,795 174 174

Trading Services:

Commitments Town Hall Complex- 194 Security Centre 624 195 Long Term Strategy and Consultancy 10 Markets- 196 Gorton Market Redevelopment 688 Commitments sub-total 1,322

Trading Services 1,322

Totals EPCS 64,329 50,237 14,477 10,755 75,469 Manchester City Council Item 5(c) Executive 11 February 2009 APPENDIX D

MANCHESTER CITY COUNCIL

CAPITAL STRATEGY

2009-2012

CONTENT

1 Capital Strategy:

1.1 Background 1.2 Strategic Overview 1.3 Strategic Partnerships 1.4 Corporate Asset Management Strategy 1.5 Major Programmes

2 Capital Budget Overview:

2.1 The Capital Budget for 2009-2012, including Funding Resources 2.2 Revenue Implications of Capital Investment 2.3 Prudential Borrowing

3 Delivering the Capital Programme:

3.1. Organisational Change 3.2. The ‘Manchester Method’ (Phase 1) 3.3. MCC Gateway Review (Phase 2) 3.4. Collaboration Software (Phase 3) 3.5. PM ‘Centre of Excellence’ (Phase 4) 3.6. Procurement Strategy 3.7. Monitoring Performance 3.8. Regional and National Initiatives

Manchester City Council Item 5(c) Executive 11 February 2009

1. CAPITAL STRATEGY

1.1 Background

This document updates the previous version of the Capital Strategy Report and shows how the capital investment programme is prioritised and delivered to support the strategic objectives of the Manchester Community Strategy and the corporate objectives of the City Council. Both the corporate property strategy and asset management plan continue to provide a focus for investment and the programme is influenced as ever by rolling three year business plans and the outcomes of revenue budget planning.

The process can be illustrated in the following way:

Manchester Community S trategy

Corporate

plan

Rolling Three Year Medium term Business Financial Capital Plans Strategy Strategy

Service Asset Corporate AMP Management (property Plans strategy)

1.2. Strategic Overview

Over the last 10 years the Council and its partners have made major advances in pursuing the agenda for regeneration. Many areas of the city that suffer from acute economic and social deprivation have undergone a transformation to substantially improve their future prospects and long term sustainability. The Commonwealth Games gave a further stimulus to investment and development enhancing the city’s reputation worldwide. At the same time, the city centre has benefited from major investment in new attractions and facilities and has become a location where people increasingly choose to live, work and play. The airport, universities and other major economic assets continue to expand and develop underlining Manchester’s prominence as regional capital of the North West. Manchester City Council Item 5(c) Executive 11 February 2009

Levels of investment remain high and the pace of change has quickened but much remains to be done. Alongside our successes there are neighbourhoods that continue to experience acute levels of deprivation, low skills, poor educational attainment, high levels of ill-health and crime in the context of a poor physical environment. The challenge for Manchester, for the next decade and beyond, is to further improve the quality of life for all residents, increase their overall social and economic prospects, and enable them to participate fully in the life of the city. The purpose of the capital programme and the equivalent plans of our partner agencies are to meet this challenge through coordinated programmes of capital investment.

Economic Conditions

The City Council is working with its partners locally, sub-regionally and regionally and with the government to try to give individuals, communities and businesses the best possible support through the economic downturn, ensuring we are in a good position to take advantage of the recovery when it happens. This means taking a flexible, tailored, responsive approach, which changes as circumstances allow; whilst retaining focus on our long term vision and key objectives. This includes working closely with the new Homes and Communities Agency to support regeneration and the housing market. Flexibility needs to be retained within the Capital Strategy to enable the council to pro-actively respond to these pressures examples include:

• There is a risk that private sector building activity will cease on sites with partially completed development, completed schemes will stand vacant or work on sites with outstanding planning permission will not start at all. A Site Appraisal Group is looking proactively at sites and considers most apt interventions to progress. This work covers National Affordable Housing Programme schemes, Housing Market Renewal schemes, key regeneration initiatives and market schemes and will allow prioritisation of support through an options appraisal process. Initial meetings have identified a list of potential schemes where intervention may be appropriate and project teams are being established to work up the detail of bespoke packages of assistance for discussion with the Homes and Communities Agency.

• Officers are working with the new Homes and Communities Agency and others to ensure that the city makes the most effective use of Government’s housing market package. Activity includes City Council feeding into bids to the clearing house and HomeBuy Direct to ensure a strategic fit. Manchester has made an expression of interest in fast tracking the Government’s Mortgage Rescue scheme to keep residents in their homes, initially to support the case for enhanced advice services.

• The government has announced that it will bring forward £3bn of capital spending from 2010-11 into 2009-10 and 2008-9 for housing, education and transport and other construction projects. As above, at the request of the Joint Economic Commission (JEC), officers have submitted a list of 8 priority housing schemes for potential support by the Homes and Communities Agency. In addition, officers have collated a list of construction projects in Manchester, particularly in education and regeneration, that can be moved forward quickly. These have been proposed to the government, via Government Office North West. Manchester City Council Item 5(c) Executive 11 February 2009

There is also a direct impact on the amount of resources available to finance the capital programme. The Council is receiving reduced capital receipts from sale of its land, due to land values falling and there is evidence of purchasers not proceeding and developers withdrawing from schemes. We have responded to this situation by deferring some sites until there is market recovery and will be putting effort into getting sites and properties ready to bring to market at the appropriate time. The City Council has implemented a funding strategy to protect capital receipts so that the only disposals are ones where best value is achieved or where they are a key driver for regeneration. The use of prudential borrowing powers will be essential during this period to bridge the gap until the receipts can be realised.

1.3 The Sustainable Community Strategy

The Manchester Way is the Sustainable Community Strategy 2006 to 2015 which has been produced by the Manchester Partnership (Manchester’s Local Strategic Partnership). It is delivered through actions that will benefit everyone who lives, studies, works in, or enjoys our original modern city. It will improve Manchester’s economic, social and environmental fabric.

The Manchester Partnership brings together the key stakeholders from the public, private, voluntary and community sectors. The Community Strategy sets a vision of Manchester as a world class city. By world class we mean that by 2015:

• All areas of the city will benefit from the city’s success, every neighbourhood will be included. • Manchester people will be wealthier, live longer, be healthier and enjoy happier lives. • Children and young people will be safer, more resilient and fulfilling their potential. • There will be more working families. • Six out of ten homes will be owner occupied. • Productivity (Gross Value Added per head) for Manchester will be greater than the UK average. • Manchester will be in the top 10 of European business cities. • Our population will have increased to 480,000.

Manchester City Council Item 5(c) Executive 11 February 2009

The vision will be achieved by delivering the three spines of the Strategy:-

VISION WORLD CLASS CITY

Driven by the Reaching full potential in performance education and employment of the economy Outcomes of the region Larger and sub population – region wealthier, living Individual and collective self esteem longer, happier – mutual respect and healthier lives, demographic mix (age and sex), diversity, stability Neighbourhoods of choice

The priorities within each of the three spines are set out in Manchester’s Local Area Agreement. This agreement with Government sets the performance targets for the city for the next three years.

The City Council’s role is to provide the leadership to enable all private, charitable, voluntary, statutory and non-statutory bodies to achieve the Community Strategy objectives. Regeneration capital projects are particularly important to this process and they are guided by Strategic Regeneration Frameworks for each district of the city. Much of this joint working has an area-based focus and a separate performance plan is published for each ward annually.

The City Council also works with a range of public and private sector partners such as the Association of Greater Manchester Authorities (AGMA), the North West Development Agency (NWDA) and Homes and Communities Agency (HCA). Other examples of key strategic partners that contribute to the overall Capital Strategy are presented below:

1.4 Corporate Asset Management Strategy

The Asset Management Plan (AMP) is a strategic document outlining the basis upon which the authority will utilise and manage its property to maximise its input both into service delivery and financial return. The Council’s property portfolio requires investment to ensure it is in an adequate state of repair and meets statutory requirements. Most services have property portfolios that are struggling to meet Manchester City Council Item 5(c) Executive 11 February 2009 effectively the needs of their services, either at a practical level or in enabling the co- location of services to provide a comprehensive access point for services to Manchester’s communities.

Improving the management of land and building assets is a key corporate objective of Manchester City Council. Effective asset management will produce financial efficiencies in the long term. It will ensure that the property assets of the Council are appropriate to the needs of the community and users of Council services.

The Council has a corporate objective to deliver major service delivery transformation that will enable greater focus on frontline services. The Manchester Improvement Programme (MIP) is the instrument for delivering a range of changes that the Council and its departments operate. Its implications are radical and far-reaching and will need long term plans for investment in property assets.

In the area of Asset Management the Council is making important and wide-ranging changes which not only represent good practice in asset management planning but which are fundamental to the delivery of the Corporate Property Service Improvement Plan.

The introduction of the Corporate Landlord has fundamentally changed the way property is held and managed within the Council. This section now looks after all operational buildings with the exception of housing and schools. This will enable Corporate Property to take a strategic overview of the Council’s property assets to enable these to be managed more effectively, producing cost savings and more efficient use of space.

This executive summary identifies the key relevant issues.

Asset Management Plan

Corporate Property Services is the Corporate Landlord and this principle has been embedded into the Asset Management Plan. The Corporate Landlord approach is recognised as best practice in Beacon AMP Authorities by the Audit Commission and will provide a number of key benefits

• Better premises for services - that are fit for purpose and provide a good physical environment for the delivery of front line services • Allow services to focus on their core business and avoid duplication and confusion in property management and ensuring a consistent and corporate approach • More efficient use of the portfolio as a whole giving rise to efficiency savings from reduced revenue costs and capital receipts from the disposal of surplus property • More strategic overview for the AMP (Asset Management Plan) spend programme ensuring capital resources are spent efficiently and appropriately improving the standard and appearance of the premises • Ensuring corporate standards are met including compliance with statutory requirements on fire safety, legionella and asbestos and assisting policy Manchester City Council Item 5(c) Executive 11 February 2009 development and compliance on issues such as DDA and environmental issues.

Improvements have been made in systems and processes supporting asset management. These include:-

• Development and publication of a Heritage Asset Strategy • Development and publication of a Voluntary & Community Sector Strategy • Improvements in asset records including: o Ordering a new Property Records System o Data cleansing of existing property data o Data collected on operational estate to establish the role of Corporate Landlord • Improved assessment of the level of outstanding maintenance • Implementation of new process for managing the maintenance of property • Improvement to the manner and degree of reporting to both corporate and Executive Members

The asset management planning process has been reviewed and improved, particularly in the field of planned maintenance, and the challenge is to ensure that with other asset strategies, these continue to translate into a marked reduction in the level of backlog maintenance.

AMP Repairs Programme

As previously reported to members the AMP terms of reference have been readdressed to focus resource on the suitability and sustainability of the buildings that the Council own and provide a service to the public from. Condition surveys detailing the required health & safety and statutory requirements to these buildings have been completed and a programme of improvements is ongoing.

The AMP Board has been created to ensure that the programme of works is aligned throughout the process with working groups set up that report into the AMP Board. Update reports have been presented throughout the year to the Resources and Governance Overview and Scrutiny Committee ensuring members are kept up to date on the AMP repairs programme. The creation of the AMP Board has ensured that a single resource manages the review, design and subsequent works and review stages allowing a consistency in quality and the achievement of best value. The Treasurer is appointed as the senior owner of the AMP Board, and Councillors Priest and Pagel are appointed Board Members.

The AMP repairs budget, which includes AMP repairs, disability access and City Centre liabilities, has been combined into one budget, however reporting on spend is analysed into theses three categories.

The AMP programme continues to address statutory health & safety requirements and to continue to ensure that it achieves best value is working with energy management to start in working toward achieving energy and carbon reduction targets Manchester City Council Item 5(c) Executive 11 February 2009

Data

During the past year the Council has been exploring appropriate benchmark indicators against which current performance and performance improvement can be judged. For operational buildings property performance data collection and analysis is being improved in 2 phases. Phase 1 will collect basic data based on national guidelines providing data on current property condition, running costs, extent of repairs, accessibility and environmental issues.

1.5 Major Programmes

The capital programme comprises a range of projects designed to support the Council’s corporate and strategic objectives. Increasingly, these projects have been grouped into programmes of work to improve coordination and to optimise the use of external funding streams. A number of these programmes are being managed corporately to prioritise investment across the Council and to achieve efficiency gains through a joined up approach to procurement.

Given the size, scale and diversity of the challenges that confront the city, the difficulty of translating programmes agreed at a city level to drive forward the regeneration of the core of the City Region into local neighbourhood interventions has been overcome in Manchester by the establishment of Strategic Regeneration Frameworks (SRFs). The SRFs have been established at a "sub-city" or district level and, with five Strategic Regeneration Frameworks and the City Centre Strategic Plan, there is now complete coverage of the city. The Frameworks set out a broad vision and objectives for each part of the city aligned to the Community Strategy and are designed to:

• Play a vital role in integrating the physical, economic, social and environmental interventions required to deliver long-term change and an improved quality of life for residents; • Set out the long term plans for neighbourhoods that enable all stakeholders to understand the sequencing of investment decisions and; • Be instrumental in bringing public services together to drive up service quality, delivering on outcomes for the neighbourhood and planning all capital investment in order to reinforce and sustain the residential, commercial and retail markets in the district

The frameworks are the cornerstone of delivering the holistic, joined up interventions needed to support the regeneration of the city and the creation of successful neighbourhoods within it. Our major capital programmes as set out below are rooted within the SRF’s - and the Local and Ward Plans that support them – and underpin the delivery of our ambitious regeneration agenda. Manchester City Council Item 5(c) Executive 11 February 2009

1.5.1 Housing –

The City Council's Housing Service delivers services to both public and private sectors and, through the Corporate Housing Strategy, provides a major contribution to the Council's wider regeneration agenda. The Housing Strategy sits firmly within the Council's Community Strategy.

The planned capital budget for 2009/2010 to 2011/2012 continues to build on the core aims and objectives, which are to:

• Deliver quality and choice in the housing market • Create safe and sustainable communities • Reduce inequalities • Deliver modern public services

The Government’s Communities Plan required that all authorities should determine, with tenants, how they would achieve the decent homes standard. If the authority’s own resources were insufficient to achieve the standard, then a plan was required to demonstrate how this to was to be delivered. In Manchester, this plan has developed into the Housing Investment Options Strategy, which to date has delivered Northwards Housing Trust (NHT), the City Council’s Arms Length Management Organisation (ALMO) and three major stock transfers to new local housing companies, (Parkway Green Housing Trust, Southway Housing Trust and City South Manchester Housing Trust which were successfully completed in October 2006, November 2007 and June 2008 respectively).The completion of the transfer of the East Manchester properties is due in the early part of 2009 with the West Gorton transfer under review due to funding pressures. 660 properties in Ardwick and 1500 properties in Miles Platting are being improved and managed using the Government’s Private Finance Initiative and the aim is to use PFI funding to improve and manage two further estates in Brunswick (900 properties) and Collyhurst (1500 properties). The public sector programme continues to invest in projects that will contribute to achieving the decent homes standard and maximise the energy efficiency of our properties – such as modern heating systems, the installation of UPVC double glazed windows, insulation, re-roofing, rewiring, and the modernisation of old and inadequate kitchens and bathrooms.

During 2009/10 a review of the Northwards ALMO future options will be carried out. Decent Homes will be delivered for this stock by 2010/11, but the ongoing maintenance of the Decent Homes Standard is likely to exceed Government allowances through the MRA and there are a number of options for the ALMO such as transfer, becoming self financing, continuing as is or bringing back to authority management. The latter two options are likely to result in an additional call on capital expenditure from the housing capital programme.

The city’s regeneration and place-shaping strategy is supported by the Housing Capital Budget. The programme focuses on improving quality and choice in the housing market, including access to affordable home ownership. Comprehensive Manchester City Council Item 5(c) Executive 11 February 2009 area-based programmes of home improvement, targeted clearance, tackling empty properties and addressing problems with the private rented sector are delivered within the Strategic Regeneration Frameworks and Local Neighbourhood Plans.

With support from other funding sources, including the European Regional Development Fund and Housing Market Renewal programme, the housing service also provides funding for home improvement agencies, improved energy efficiency in homes, and improved access to properties for people with disabilities.

At the end of the 3 year programme Housing Market Renewal Grant is likely to end. In preparation a strategy of service re-configuration, re-prioritisation and streamlining will be pursued to ensure that the service delivers priorities within available resources. The Housing Capital Programme will need to provide investment support to complete the housing market restructuring objectives. In addition there will be a move towards a reduction in the capitalisation of staff salaries so that capital works and staff cost apportionment is proportionally reasonable.

The capital programme includes support for PFI projects in the form of acquisition of residential and commercial properties; council tenant homeloss and relocation; and 'tying in' works to former Right to Buy properties. The works are expected to enable investment leverage of over £1bn.

The economic downturn is having an impact on the housing capital programme in terms of: • land disposals which were assumed to support the programme are now generating depressed values. This will result in reduced resources for immediate reinvestment; • a delay to regeneration and housing schemes which relied on open market sale contributions, with a consequent delay in delivering those strategic objectives; and • a recognition of the economic downturn by Government in the form of an intention to increase and/or accelerate funding, from which Housing has identified private sector decent homes works as a priority.

In preparation for the Single Conversation with the newly-formed Homes and Communities Agency (HCA) and given the fundamental changes described above officers will commence a strategic review of the programme to ensure that: • we have a clear strategy to maximise all available sources of funding; • resources support the key priorities of the Strategic Regeneration Frameworks, neighbourhood plans and strategic development areas; • opportunities to maximize employment and boost the economy are progressed; • consideration is given to supporting the affordable housing programme including opportunities to pump prime funding with HCA resources to support and make intermediate housing deliverable; Manchester City Council Item 5(c) Executive 11 February 2009 • priority is given to protecting existing investments generally and to providing confidence in future investment; • the ALMO options review determines the level of additional resources required to maintain decency and secures the most effective route for funding. The final timing and value of capital funding resources may influence the timetable and delivery of Housing Strategic objectives. The current Housing Capital Budget resources are: 2009/2010 2010/2011 2011/2012 Total £M’s £M’s £M’s £M’s 96.030 78.733 34.885 209.648

Supported Housing objectives will be delivered by the Extra Care initiative.

1.5.2 Transport Investment and Services

The provision of transport has tremendous impact on the communities of Manchester. Well planned transport services contribute to the achievement of successful communities, healthier residents, more equality and social inclusion, sustainability and better local economies. Where transport fails, these aims, and those priorities set out in the Community Strategy and other key corporate documents, are put at risk.

The City Council’s vision is to achieve a world class transport network; a network that allows all residents, businesses and visitors to access economic, learning and recreational opportunities across the city in a manner that is environmentally-friendly, safe and affordable.

Local Transport Plans

A Local Transport Plan is five-year integrated transport strategy, prepared by local authorities in partnership with the community, seeking funding to help provide local transport projects. The plan sets out the resources predicted for delivery of the targets identified in the strategy.

The key strands of GMITS are to: increase public transport trips to centres Manchester City Council Item 5(c) Executive 11 February 2009 better facilities to encourage short journeys to be made by foot or by cycle and land use planning and regeneration strategies to minimise trips to out of centre locations. The prime objective of LTP2 is to accommodate the trips generated by the projected increase in jobs in the most sustainable way so as to improve social inclusion and protec t the environment and enhance quality of life.

The Second Local Transport Plan policy framework is founded on ‘shared priorities’ agreed between central and local government:

delivering accessibility tackling congestion safer roads better air quality other quality of life issues

Our progress in these areas is measured by a Greater Manchester level regime of local transport performance indicators and ongoing District reviews of LTP2 strategy and investment programme

Local Transport Capital Programme

Approximately £10 million annual Local Transport Capital funding for Manchester will continue to deliver a comprehensive investment of improvements to the transport network and neighbourhood district centres, including work on the carriageways, footways, street lighting, bridge strengthening and waterways. Headline transport priorities include: • Public transport led strategy including walking and cycling • Reducing casualties from road traffic collisions • Delivery of the South East Manchester Multi Modal Study (SEMMMS) implementation plan to address pressures on the transport network in the southeast area of the city region • Maintenance of highway assets including bridges and footways • Rationalisation and enhancement of signs within and around the city centre • Introduction of safer and more efficient traffic control systems to replace obsolete traffic control equipment • Effectively managing the transport capital programme and meeting LTP2 and local targets • Continued development of the Regional Centre Transport Strategy and funding package

Manchester City Council Item 5(c) Executive 11 February 2009 Asset Management Plans

We are undergoing a review of the service level frameworks as part of a wider corporate review through the Manchester Improvements Programme. Transport Services has undertaken the development of a Highway Asset Management Plan (HAMP) to inform maintenance policy and investment decision making.

The scope of this work will be broadened to produce a Transport Asset Management Plan (TAMP), to reflect the network management duties now placed on the City and in recognition that transport infrastructure is the City’s largest capital asset.

The City has a PFI in place for the management of our street lighting stock since 2001.

1.5.3 Children’s Services –

1.5.3.1 BSF / Academies - The government’s £45 billion initiative to transform the way that secondary education is delivered will provide capital funding to remodel or rebuild every school in the country over the next 15 years through the Building Schools for the Future (BSF)/Academies programme. Manchester is investing £216 million in its BSF Wave 1 Programme which includes the rebuild/remodel of 16 schools (9 secondary and 7 Special Education Needs (SEN) secondary schools) plus ICT investment at Wright Robinson College.

The £170 million Manchester Academies Programme is for seven new Academies to be opened across the City. The intention is that all seven academies will be up and running by 2010. Four Academies, namely Manchester Enterprise Academy and Manchester Health Academy in Wythenshawe and Manchester Creative and Media Academies (boys and girls) in North Manchester will open in 2009. These academies aim to provide pupils with the qualifications and skills needed to make the most of future employment opportunities in the region’s growth industries.

Manchester is preparing a further Outline Business Case for a BSF Wave 4 Programme for over £100 million which is due to be submitted in March 2009 for a further 9 schools (5 secondary and 4 secondary schools/provision) plus ICT investment at Chorlton High School and Parrs Wood High School.

Manchester has therefore a combined Building Schools for the Future (BSF) and Academies programme with an estimated investment of £500 million in all the secondary schools.

1.5.3.2 Investment in Schools - Significant capital investment is earmarked for investment in other areas of service delivery for children via projects across the city to replace, extend and improve school facilities between 2009/10 and 2011/12 through the Primary Rebuilding Programme, the Manchester Partnership Programme and initiatives for extended schools and improved ICT provision. In addition individual Manchester City Council Item 5(c) Executive 11 February 2009 schools receive funding for capital investment through the schools devolved capital programme.

Plans to provide Local Authorities (LAs) with additional funding were first announced by the then Chancellor in his 2005 budget statement, in the form of a Primary Capital Programme (PCP). PCP underpins a broad government objective of renewing at least half of all primary school buildings by 2022/ 2023. LAs will receive PCP funding on an annual basis and are expected to add it to other sources of capital to deliver locally determined programmes which will, over time, create primary schools which are equipped for 21st Century teaching and learning, which are at the heart of community sustainability and which put high quality children's services within reach of every family living in the City.

Through PCP, LAs are encouraged to develop a long term strategic approach to capital investment, by drawing together planning and funding for the pre school, primary, secondary and SEN/ inclusion aspects of provision. The Children's Plan and the primary/ secondary Strategies for Change will provide the pedagogical and organisational framework for capital investment to be used to support genuine transformation in education.

Devolved Formula Capital (DFC) is an amount allocated each year to primary, secondary and special schools to be spent by them on their priorities in respect of buildings, ICT and other capital need. Priorities are set at school level, but should have regard to planned expenditure in a local authority's asset management plan, or equivalent voluntary aided plan. Through the LA's partnership programmes, schools are able to use DFC to attract additional funding from the LA, to carry out larger/ more expensive capital projects. This joint funding approach benefits schools directly and ensures that LA AMP identified priorities are met.

Modernisation and basic needs funding is allocated once every three years to LAs by the DCSF, for use in delivering strategic objectives identified through the AMP process (e.g. bringing accommodation up to date to help improve standards of achievement) or through school organisation reviews (e.g. to provide additional places). Modernisation is allocated to LA’s on a formula basis that takes into account both building need and pupil numbers. It can be joined up with any other resource available to the LA which can be spent on capital, and is used in accordance with each LA's asset management plan.

1.5.3.3 Sure Start - Phase 2 of the Sure Start Children’s Centres capital investment programme was completed in March 2008. A further phase of capital investment for Sure Start of almost £2m was secured for 2008/09 to 2010/11 and proposals are being drawn up and prioritised accordingly. This programme is being delivered alongside the Quality and Access (Q&A) Programme for which capital resources of over £6m for public and private sector providers have been made available by Government over the same period. The Q&A grant is to be used to:

• Improve the quality of the learning environment in early years settings to support delivery of the Early Years Foundation Stage (EYFS), with a particular emphasis on improving play and physical activities; and ICT resources.

Manchester City Council Item 5(c) Executive 11 February 2009 • Ensure all children, including disabled children, are able to access facilities.

• Deliver the extension to the free entitlement offer for 3 and 4 year olds including increased flexibility for take up of the offer by meeting needs for additional space or facilities this may create.

The process of joining up planning and funding across sectors is already taking place. Primary and Sure Start funding have been joined up, to deliver a brand new, fully integrated 420 place primary school, with a 60 place nursery and a Sure Start facility. Immediately adjacent is a brand new health facility, funded by the Health Authority.

1.5.3.4 Youth - The Youth Capital Fund is part of the Government initiative relating to Youth Matters. Manchester has been allocated £298k per annum for 3 years. It complements the overall objectives of the Children’s Services accommodation strategy and furthermore encompasses the Children and Young People's Plan. The Youth Capital Fund will enhance and facilitate proposals submitted from young people themselves under the Youth Opportunities Fund (£519k for 2008/09 and £694k per annum for 2009/10 and 2010/11). This unique project offers opportunities for young people to develop and enhance provision for their use. Young people aged 13 - 19 years old are able to apply for these funds and more importantly the allocation of the funds will be decided by them through a managed process. Young people will be able to bid for a range of projects. These projects could involve sports, drama, IT and website development, refurbishment and enhancement of existing provision for young people. Importantly, these projects will be determined by young people themselves, therefore meeting the outcomes of Youth Matters.

In addition to this, further capital funding of £452k has been allocated under the Youth Capital+ scheme. This will be used to develop youth facilities in Newton Heath and as stated above this has been done in conjunction with the youth in the area.

1.5.4 Cultural Services –

Within the Cultural Services’ portfolio of buildings and land are a significant number of the city’s most treasured heritage buildings, parks, heritage listed furniture and artefacts. The challenges of major schemes of restoration and refurbishment have had to be set against other priorities to provide modern, relevant services in local communities including new libraries, sports and leisure facilities.

Significant partnerships, most notably with the Leisure Trust, Sport England and MANCAT (now Manchester College) have ensured that City Council investment has been significantly enhanced by external funding secured through such partnerships. New sports and leisure provision, new and refurbished library services have been delivered as a result. Ongoing investment through the capital programme in the city’s parks have seen the numbers of parks awarded Green Flag status grow from one in 1999 to 27 in 2008, more than any other local authority in the country.

Manchester City Council Item 5(c) Executive 11 February 2009 Manchester City Galleries provides a leading Gallery service within the UK contributing to education regeneration and tourism. Its capital programme provides the necessary investment to support the delivery of Manchester City Galleries 2009/12 Business Plan objectives.

The completion of the scope of the Expansion Project, in particular the relocation, display and interpretation of the City’s nationally significant collections, will enable the Service to maintain the high quality Manchester Art Gallery site as a flagship city centre venue with an international reputation

The investment in the development of the International Centre of Excellence for Textiles/Fashion will maximise the potential of the Gallery of Costume to engage individuals, schools, the community, MAES and higher education to stimulate creative practice and pride in achievement.

The Library and Information Service delivers a wide range of leisure, cultural, learning and information services and opportunities to residents, businesses and visitors. The service seeks to build on the transformational change delivered over the past five years modernising the library estate through a programme of refurbishment and new buildings. The City’s library strategy outlines an ambition to, ‘replace every community library in the City within five years as well as a major refurbishment of Central Library and the Archive Service’. The strategy proposes a citywide District model with a range of district, community and smaller outreach libraries in each district, underpinned by the knowledge and expertise of Central Library and a virtual web based 24 hour library. Libraries are to be co-located with other partners including health, the Manchester College and Academies. The refurbishment of Central Library is proposed as part of the wider Town Hall Strategy to include the relocation of the Library Theatre and the creation of a new state of the art Archives Centre.

To date, nine libraries have been funded and there are emerging plans for the next five. There is a need now to plan the final phases and to identify how much funding will be required from the City to complete the delivery of the strategy. The Library Theatre, currently located within Central Library is looking to relocate as part of the Central Library Refurbishment Project as there is no capacity within Central Library for the theatre to expand. Work to identify the options and costs going forward has been commissioned and will report in April 2009.

Leisure Services are responsible for the strategic and operational management of indoor leisure (through a number of Trusts) sports development and sports events, community activity, parks and outdoor leisure facilities. The service makes a strong contribution to the City’s priorities through the delivery of a clear sports and physical activity policy that gives every child and adult the opportunity to become involved in sport and healthy lifestyles and a parks strategy that strives to provide safer and high quality neighbourhood spaces for people to own and enjoy.

Leisure Services’ proposed capital programme 2009/10 to 2011/12 will support the continued physical and visual development of parks and sporting facilities in the City, Manchester City Council Item 5(c) Executive 11 February 2009 which aligns and assists with the delivery of department’s key business plan objectives. The BMX / Velopark development at Sportcity and the restoration of Heaton Hall are corporate projects, with Leisure Services supporting a cross- departmental approach towards project delivery.

Leisure’s capital programme priorities are the following projects:

• Restoration of Alexandra Park. • Ronald Johnson Playing Fields. • Parks Development Programme. This programme will provide improvements to infrastructure, playgrounds, sport/visitor facilities and allotment provision.

1.5.5 Customer Services –

A customer service centre within the refurbished Town Hall Complex in line with the customer strategy will provide improved access to services in an environment that is designed around the needs of the customer.

1.5.6 Neighbourhood Services -

Neighbourhood Services are responsible for delivering high quality, locally responsive and coordinated services including Environmental Services, Regulation and Enforcement, Private Sector Housing and Trading Services, Adult Social Care and Library and Leisure Services (referred to in the Cultural Services section above). A key aspiration for the service is to deliver safe and clean local neighbourhoods that residents feel part of and proud of, including a vibrant and dynamic City Centre for both residents and visitors.

Waste Strategy - Funding is required to finance the roll out of the waste strategy agreed by members following the extensive public consultation in 2008 to fund the purchase of the various types of waste containers required for the new service roll out.

Public Realm – • Investments by the Council and Partners continue to support the creation of safe and sustainable communities. Partnerships primarily with Red Rose Forest, Newlands and the NWDA have lead to investments which have resulted in significant improvements in previously poor quality, under used green space. • Investments in the city centre public realm to upgrade our infrastructure. • Our priority is to ensure that all our public open spaces feel welcoming and safe. CCTV represents a cost effective way of achieving the feeling of safety. Manchester City Council Item 5(c) Executive 11 February 2009

Trading Services proposed capital programme 2009/10 to 2011/12 will support the continued physical and visual development of the City’s markets and cemeteries. .

The service priorities are:

Bereavement Services : A three year programme of road and pathway surfacing programme that has been prioritised based on condition surveys and usage. Improvements may lead to increased revenue to the trading account and also support the Service’s ambition to achieve Green Flag, World Class Service and ICCM Charter status.

Markets: Firstly a project to upgrade and re-locate Wythenshawe Market as the first stage of the regeneration of Wythenshawe District Centre in line with the 10-year master plan. Secondly a project to demolish and rebuild, in modular format, the Church Street Market, which is adjacent to the Arndale Centre and is a prime gateway to the Northern Quarter. Both of these schemes support the City regeneration agenda and will improve the quality of markets to local communities and visitors to the City.

1.5.6 Neighbourhood Funding Strategy -

The Council’s Neighbourhood Funding Programme identifies the capital and revenue investment priorities in local communities identified by elected members. The pilot Neighbourhood Funding Strategy (NFS) was launched in July 2007, with the following objectives:

• to support the ward representative role of elected members in influencing the whole of budgets through ward co-ordination; and

• to enable neighbourhood priorities to be reflected in mainstream budgets and business plans.

The scheme applies to all Council services and partnership activity relevant to neighbourhood priorities. Hitherto, over £3m of neighbourhood investments have been identified for the capital programme.

1.5.7 Capital Programme Funding Strategy -

As a result of the economic downturn the City Council has implemented a funding strategy to protect capital receipts so that only essential disposals or ones where best value is achieved are completed. The City Council intend to use prudential borrowing to remove any uncertainty about capital resource availability.

Manchester City Council Item 5(c) Executive 11 February 2009 In recognition of the pressures on the local construction industry in particular the City Council is also examining ways in which the capital programme might be accelerated and is engaging Government in dialogue as to how any accelerated programmes might be funded. In addition the acceleration of the programme could generate best value for the City Council - increased market competition for work could result in reduced procurement costs.

2. CAPITAL BUDGET OVERVIEW

2.1 The Capital Budget 2009/10 to 2011/12 The capital programme is designed to support the Council's strategy, aims and objectives by providing for new or improved services and other improvements. To deliver the programme however, the City Council must identify and secure enough resources to pay for each project in the overall programme. There is also a need to recognise that the Council retains sufficient capacity to address any capital investment requirements that have not yet emerged.

The planned programme 2009/10 to 2011/12 is estimated to cost £788 million. Projects due to start in 2009/10 will be progressed to conclusion but the timing of the availability of resources could influence some start and completion dates. In recognition of the economic downturn strategic decisions have been made to revise the capital disposals programme and to cover any potential funding gaps by the use of prudential borrowing.

The total spend in 2009/10 is estimated to be £364,146,000. Resources available to fund the programme are expected to be:

Resources for 2009/10 '£000 Supported Borrowing 39,687 Unsupported Borrowing 13,378 Grants 248,779 Contributions 3,628 Capital Fund 9,327 Capital Receipts 32,500 Revenue 16,847 Total 364,146

Manchester City Council Item 5(c) Executive 11 February 2009 The summary capital budget for 2009/10 is as follows:

Service Department £000 Housing 96,030 Children’s Services - Education 186,399 Children’s Services – Children’s Social Care 4,860 Adult Social Care 5,700 Transport 20,920 Chief Executive’s (inc grants and regeneration) 19,660 Corporate Services (including corporate asset 23,394 programme) Environmental Services 3,107 Libraries and Theatres 3,667 Manchester City Galleries 235 Manchester Leisure 174 Total 364,146

2.2 Revenue Implications of Capital Investment

The Council has strengthened the links between capital and revenue by merging the budgetary process and timetable. Service delivery strategies and asset management plans identify the need for capital investment to help maintain and improve the quality of service to the public. Particular attention is given to the revenue implications of capital investment and are considered in the decision making process to ensure the long term affordability of capital investment proposals, including life cycle costs. The Gateway scrutiny system for capital bids ensures that any significant revenue implications are identified at Gateway 3 (formal capital budget bid request stage) and further checks are instigated at Gateway 5 immediately prior to project delivery. There is full budget provision for the revenue implications of the three year capital programme 2009/10 to 2011/12.

It is recognised that asset solutions are interchangeable between capital and revenue budgets, but obviously make demands on both.

2.3 Prudential Borrowing

The Council has an option to undertake ‘prudential’ borrowing provided that the revenue costs of servicing the debt (interest charges and annual provisions for the repayment of the loan amount) are affordable both in the short term and long term. Prudential borrowing is advantageous for projects that generate savings or additional income greater than the annual cost of financing the amount borrowed (spend to save). It also offers an alternative source of finance for some of the Council’s outstanding investment needs – provided that the revenue costs of financing the loan are affordable. Manchester City Council Item 5(c) Executive 11 February 2009

The national economic downturn has required the City Council to consider the use of prudential borrowing to ensure that capital investment continues at the required level. There is adequate provision within the revenue budget to fully finance the proposed levels of prudential borrowing.

3. Delivering the Capital Programme

3.1 Organisational Change

Since 2002 the Council has introduced a new approach to management of its capital programme in order to achieve best value and bring greater surety to the delivery process. A new unit (the Capital Programme Division) has been created within Corporate Services with an expanding remit covering strategic planning, procurement, partnerships and project/ programme management. The Capital Programme Director reports to the City Treasurer and is responsible for these services (illustrated below).

Capital Programme Director

Capital Education Corporate Public Private Programme Programme Programme Technical Partnership Management Group Management Services Unit Group Group

The Capital Programme Group continues its long term strategy set out in four phases to support delivery of the programme through best practice and these are set out below along with the strategy for procurement to achieve best value developed by the Technical Services Group and new reporting procedures to monitor overall performance.

3.2 The ‘Manchester Method’ (Phase 1)

The Capital Programme Group’s first major challenge was to introduce a generic process for delivery of capital projects based on best practice (Prince2) that could be adopted by all service departments. This approach is now known as the ‘Manchester Method’.

The Manchester City Council (MCC) Project Management Handbook was first published in 2003, subsequently updated in 2007 incorporating an enhanced section for communications and inclusions from MCC Internal Audit Section. The handbook Manchester City Council Item 5(c) Executive 11 February 2009 has been subject to a further review and in 2007 version 3.0 was released which incorporates some change management elements after consultation with the Manchester Improvement Programme (MIP). The selection of a new training partner is now complete and the contract was let to QA-IQ Ltd. The courses remain over subscribed and the demand is high. Many of the initiatives of the capital programme approach have been implemented on a regional and national basis.

3.3 MCC Gateway Review (Phase 2)

The Gateway process is now well established within MCC and provides an enhanced level of scrutiny to the capital programme. The Gateway process is managed and monitored by the Capital Programme Group who have developed a set of generic templates for each stage. MCC Gateway was audited in 2007.

The Gateway is intended to provide strategic, operational and financial scrutiny of the capital programme introducing location appraisal for the first time.

The Gateway process embraces the project lifecycle from mandate to project closure and joins up existing appraisal functions involving the right people at the right time adding value to existing procedures. It is designed to encourage early submissions to a review group (Gateway 1) and will be followed by thorough project appraisal via a scrutiny panel (Gateway 3). Projects and programmes will also be reviewed at completion to confirm effective closure and examine lessons learned (Gateway 6 and 7). The process will be expanded to include benefits realisation post completion and enhanced asset management coordination on project closure. A closure group has been established to monitor timely and effective project closures. This group will provide quarterly closure status reports for the Capital Programme Board

Gateway is fully compatible with the MCC Project Management Method and consistent with the National Gateway process. The scrutiny process is intended to be flexible and can be refined further to include central government initiatives where appropriate.

3.4 Project Management Software (PMS) (Phase 3)

The Project Management Software system has been introduced to help manage the delivery of the capital programme. The PMS was rolled out to all service departments during 2007. The quality review of PMS indicates that 96% of the original specification was met.

PMS 1 has now been rolled out across MCC. Further work is continuing to include links to SAP.

3.5 Project Management ‘Centre of Excellence’ (Phase 4)

This management of Phase 4 has now passed to the senior capital programme manager. The Capital Programme Group will continue to support development of initiatives.

Manchester City Council Item 5(c) Executive 11 February 2009

3.6 Procurement Strategy

The Council has responded positively to the Gershon Report and the National Procurement Strategy. Its approach to procurement has been reviewed and where necessary refocused to achieve best value. The emphasis now is very much on coordinated programmes of work rather than a collection of separately managed projects.

The procurement strategy has delivered projects with cashable savings on tendering and procurement costs in the order of:

• Construction frameworks: 1 – 2% per project • Consultancy frameworks: Commissioning process savings of approximately £2000 per project • Mini-consultancy framework: Commissioning process savings of approximately £1000 per project

There are fewer delays (especially in the context on construction frameworks) and 95% of capital projects now finish on time.

Opportunities to deliver new investment via PFI and PPP agreements have also been embraced where this procurement route offers value for money. The Public Private Partnership Group based in the Capital Programme Division is closely involved in all such initiatives and leads on delivery of the BSF programme.

Selection of contractors is now firmly based on best value criteria rather than the lowest price tender returned. In addition, to improve the efficiency of the procurement process, a number of framework agreements are already in place.

The Council is seeking further improvements in quality and performance and the procurement team continues to work closely with the Centre for Construction Innovation based in central Manchester and the Regional Centre of Excellence (RCE) in Tameside.

3.7 Monitoring Performance

Much has been achieved over the past two years but it is important to set a baseline from which to improve still further. From inception the Capital Programme Division has adopted a number of key indicators (KPIs) to assess its own performance and measure delivery of the capital programme particularly in terms of time, cost and quality.

The Capital Programme Group collects information on 5 KPI’s covering project management and project delivery that are reported quarterly to the MCC Capital Board. In addition, the Technical Services Group monitors and reports on 8 KPI’s related to procurement that are beginning to demonstrate the strengths and weakness of the framework agreements.

Manchester City Council Item 5(c) Executive 11 February 2009 Performance measurement enables proactive management of the capital programme and provides an opportunity to forecast expenditure and where possible reallocate funds ahead of year end to reduce slippage and maximise service delivery improvements for the people of Manchester. This review and forecast approach should be constantly developed it may be possible to recognise a number of programmes/projects to be accelerated into the current year if the slippage is such that it can be utilised in this way

The Red Amber Green (RAG) reporting process has been successful giving an early warning status on progress, cost and risk on a project-by-project basis. This year the monthly RAG Report has been further defined to report the financial status of project against the budget the RAG Reporting process will be developed further for the Project Management Software to enable rolled up reporting at Programme and Project levels.

3.8 Regional and National initiatives

The Council has a broad commitment to support and share information and best practice with other local authorities and government agencies in particular the Association of Greater Manchester Authorities (AGMA).

The Capital Programme Group has undertaken some work for the Right Track project which is an information and support service for all authorities in the north west region. The initiative is funded by the North West e-Government Group (NweGG) and the North West Improvement Network (NWIN). MCC has developed a Skills Matrix for development of project managers. This work was commissioned by Right Track North West.

The group is also involved in a Core Cities initiative to improve delivery of programmes and projects by sharing experiences and processes. Core Cities have agreed in principal to undertake a maturity assessment based on the Office of Government Commerce model P3M3.

The Capital Programme Division continues to share best practice with other authorities and with central government initiatives. The local authority toolkit for project management will now be promoted regionally through the Improvement and Development Agency for local government (IDeA). The North West IDeA has already contacted the division with a view to updating the elements of the toolkit which were developed by MCC.

Manchester City Council Item 5(d) Executive 11 February 2009 ANNEX 3

Treasury Management Strategy Statement & Borrowing Limits and Annual Investment Strategy 2009-10

1. Introduction

The Council’s Treasury Management policy complies with the CIPFA Code of Practice on Treasury Management. This was adopted by the Council on 8 October 2003. In accordance with best practice, the City Treasurer has undertaken a review of the policy and is satisfied that the clauses contained therein are still relevant and complete.

The Local Government Act 2003 and supporting regulations require the Council to ‘have regard to‘ the Prudential Code for Capital Finance in Local Authorities and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable.

The Act therefore requires the Council to set out its treasury strategy for borrowing and to prepare an Annual Investment Strategy (as required by Investment Guidance issued subsequent to the Act) (included as section 10); this sets out the Council’s policies for managing its investments and for giving priority to the security and liquidity of those investments.

The proposed strategy for 2009/10 is based upon the views of Treasury officers on interest rates, informed by leading market forecasts. The report covers the following:

Treasury limits in force; Prudential Indicators; The current treasury position of the Council; Borrowing Requirement; Housing Large Scale Voluntary Transfers (LSVTs ); Interest rate prospects; Capital borrowings and the portfolio strategy; MRP Strategy; Investment strategy.

A glossary of terminology used in this report is attached in Appendix B.

It is a statutory requirement, under Section 33 of the Local Government Finance Act 1992, for the Council to produce a balanced budget. In particular, Section 32 requires a local authority to calculate its budget requirement for each financial year to include the revenue costs that flow from capital financing decisions. This, therefore, means that increases in capital expenditure must be limited to a level whereby increases in charges to revenue from: -

1. increases in interest charges caused by increased borrowing to finance additional capital expenditure, and 2. any increases in running costs from new capital projects Manchester City Council Item 5(d) Executive 11 February 2009 are limited to a level which is affordable within the projected income of the Council for the foreseeable future.

2. Treasury Limits for 2009/10 to 2011/12

There is a statutory duty, under section 3 of the Local Government Act 2003 and supporting regulations, for the Council to determine and keep under review how much it can afford to borrow. The amount so determined is termed the Authorised Limit.

The Council must have regard to the Prudential Code when setting the Authorised Limit, which, essentially, requires it to ensure that total capital investment remains within sustainable limits and, in particular, that the impact upon its future council tax/rent levels is acceptable.

The Authorised Limit is to be set, on a rolling basis, for the forthcoming financial year and two successive financial years.

3. Prudential Indicators for 2009/10 – 2011/12

A requirement of the Local Government Act 2003 is that local authorities comply with the Prudential Code for Capital Finance in Local Authorities. Under the Code, various Prudential Indicators must be approved by the budget setting body, i.e., the Council. These indicators are listed in Appendix 4 to Annex 1 of this report.

4. Current Portfolio Position

The Council’s estimated treasury portfolio position at 31 March 2009 will comprise:

£000 £000 Average Rate Fixed Rate Funding PWLB 11,597 8.87% Market 308,250 4.88% Stock 8,253 3.36% 333,575

Variable Rate Funding PWLB 0 0% Market 241,390 4.84% 241,390

Temporary Borrowings 44,103 0.75%

Airport Loans (83,255) 10.22%

Manchester City Council Item 5(d) Executive 11 February 2009 5. Borrowing Requirement

The potential long-term borrowing requirements, plus alternative financing arrangements, over the next three years, are as follows:

2009/10 2010/11 2011/12 £000 £000 £000 Potential Long-term 249,124 132,407 48,021 borrowing

2009-10 figures include the potential refinancing of £198.3m of PWLB loans, repaid early in June and July 2006 and June and July 2007, using temporary cash balances. 2009/10 and 2010/11 figures include borrowing requirements for the Building Schools for the Future programme, which had been funded by direct government grant in previous years. In practice, given the expected interest rate differential between long-term debt (4% to 4.5%) and short-term loans (less than 1.5%), the re-borrowing of the earlier repayments is highly unlikely.

6. Housing Large Scale Voluntary Transfers (LSVTs )

In 2004-05, the City Council began the implementation of an approved three-year programme to transfer the vast majority of its Housing stock to either Housing Associations, Arms Length Management Organisations (ALMOs) or PFI control. The first two transfers took place in October 2004 and April 2005.

The agreement with the Department for Communities and Local Government (DCLG) is that they will redeem equivalent PWLB debt associated with those properties being transferred to Housing Association control.

Transfers of Housing stock on the Stockport Overspill and City South estates took place in April and June 2008 respectively.

Advice from Sector, our Treasury advisers, with regard to these two transfers, was that a pro rata reduction of each PWLB loan would be the most suitable approach. This was adopted and resulted in the Council’s PWLB debt being reduced by £99.086m.

One further transfer is expected to take place in March 2009, which will complete the transfer process. The profile of debt set out at paragraph 4 above is after the final transfer / debt redemption has taken place.

Manchester City Council Item 5(d) Executive 11 February 2009 7. Prospects for Interest Rates

The Council has appointed Sector Treasury Services as its treasury adviser and part of their service is to assist the Council in formulating a view on future interest rates. Appendix A draws together a number of current City forecasts for short term and longer-term fixed interest rates.

The following table gives Sector’s central view:-

The following paragraphs follow the convention used by H.M. Treasury in its budget reports and statistics in as much as years are always calendar years, not local authority financial years, e.g., quarter 1 refers to the January to March quarter, not the first quarter of a local authority financial year (April to June).

Economic background

Introduction

The sub prime crisis of early 2008 was replaced by the banking crisis of autumn 2008. The world banking system came near to collapse and governments around the world were forced to re-capitalise and rescue their major banks. The resulting significant decrease in lending from banks anxious to preserve capital led to economic forecasts being sharply reduced and recession priced into markets. This in turn led to sharp falls in oil and other commodity prices, with the result that inflation, which in the UK was running at over 5%, was considered less important as recession fears drove interest rate sentiment and policy. A coordinated global interest rate cut of 0.50% took place on 8 th October 2008. Forecasts in the UK were for further sharp cuts in interest rates as recession came into view.

International

Early in 2008, the US economy was being badly affected by the housing market slump. Interest rates were at 2% and inflation was being dragged higher by the inexorable rise in commodity prices. The ECB was very concerned about rising inflation and less about the state of the economy. Manchester City Council Item 5(d) Executive 11 February 2009 The second quarter of 2008 was torn between inflation worries on the one hand, with oil rising towards $150 per barrel, and the deteriorating economic outlook on the other. In the second and third quarters of the year, the financial crisis erupted and escalated, as the world became aware of the extent of the sub-prime fiasco and the impact it was having on institutions which had invested in these issues. In September, Fannie Mae/Freddie Mac (the mortgage banks) and AIG, the insurance giant, had to be bailed out by the US Federal Government. Then in mid September, Lehman Bros., the investment bank, was allowed to fail. This triggered a domino effect, with other banks and financial institutions having to be rescued or supported by governments around the world. After the collapse into receivership of the Icelandic banks in early October, other countries then started to feel the strain and a number had to approach the International Monetary Fund for support. Eventually, even the Asian ‘Tiger’ economies were affected, including India and China, and it became clear that the crisis had become a global one and no country was insulated from it. The financial crisis had, therefore, precipitated an economic crisis and there was a co-ordinated global interest rate cut with the US Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England’s Monetary Policy Committee (MPC) all cutting rates by 0.50% on 8 th October. The Fed subsequently cut rates again by 0.50% to 1% on 29 th October and, again. on 16 December to a band of 0.0% to 0.25%, in an attempt to stave off the oncoming recession. Inflation was no longer considered the main problem. On 4 th November, the USA elected Barack Obama as President with little immediate financial impact. The ECB reduced rates again on 6 th November by 0.50% and by its biggest ever cut of 0.75% on 4 December to reach 2.5%

GDP (Gross Domestic Product): growth was already slowing in 2008 from 2007 before the full impact of the credit crunch was felt. Earlier in 2008, GDP was 2.3%, whereas, in the autumn, the figure fell back to -0.3% and was then expected to continue to be negative going into 2009. Wage inflation remained relatively subdued, as the Government kept a firm lid on public sector pay. Private sector wage growth was kept in check by the slowing economy. Growth slowed across the economy and unemployment rose throughout the year, with forecasts of 2 million unemployed by the end of the financial year and continuing to increase thereafter through 2010. Notwithstanding the pressures on household finances, consumer spending still continued at a reasonable level although the trend was slowing as the year progressed. Manchester City Council Item 5(d) Executive 11 February 2009 Bank lending came to a virtual standstill in the autumn, as the credit crunch tightened its grip and various banks internationally had to be rescued, or supported, by their governments. The Government and Bank of England supplied massive amounts of liquidity into the banking market, in an attempt to re-ignite longer interbank lending. The Government took action in September, to either supply finance itself to re- capitalise some of the major clearing banks or to require the others to strengthen their capital ratios by their own capital raising efforts. This was so that these banks would be seen to have sufficient reserves to last through the coming recession with its inevitable increase in bad loans etc. The housing market also came to a virtual standstill, as lenders demanded larger deposits and higher fees. House sales and prices both dropped sharply. Government finances deteriorated, as income from taxation dropped as the economy slowed and the cost of the bailout of the banks was added to the deficit. U.K. equity prices declined sharply in the third and fourth quarters, as the impending recession was priced into the markets. Prices hit five year lows and volatility was extremely high. The story of 2008 has been the credit crunch, the banking crisis and the change in economic outlook from slow growth to outright recession. After the initial concerns about the impact of the credit crunch in the earlier part of 2008, it appeared as though the storm had been weathered. The MPC had been very concerned about Consumer Prices Index (CPI) inflation, which had been rising sharply on the back of higher commodity and food prices. Bank Rate reached a peak of 5.75% in July 2007, after which cuts of 0.25% occurred in December 2007 and February and April 2008 before the major cuts in the autumn. The economic data had been indicating a slowing economy for some while but it was not sufficiently weak to force the MPC into another cut. It was the depth of the banking crisis, pre-empted by the collapse of Lehman Bros in New York that eventually drove the MPC to cut interest rates by 0.50% on October 8th, in concert with the Fed, the ECB and other central banks. It was then appreciated that the economic downturn would be much more severe than previously thought and interest rates were subsequently slashed by 1.50% on 6 November, 1.00% on 4 December and 0.50% on 8 January 2009. The LIBOR spread over Bank Rate has also been a feature, and a concern, during the year. Because of the credit fears, and the reluctance of lenders to invest cash for long periods, 3 month LIBOR (London Inter Bank Offer Rate – the rate at which banks lend to each other) has been substantially higher than Bank Rate. This has meant that the MPC’s power over monetary policy has been eroded by the widening of this spread between LIBOR and Bank Rate and it has, therefore, had a limited ability to bring relief to hard pressed borrowers through lower interest rates. However, the power of the Government over the semi nationalised clearing banks had considerable impact in enforcing pro rata reductions to the 1.50% Bank Rate cut in November on some borrowing rates. The Government has abandoned its ‘golden rule’ of borrowing only for investment. The pre Budget Report on 14 November revealed the Government’s plans for a huge increase in Government borrowing over coming years, as a result of falling tax revenues and also due to tax cuts and increases Manchester City Council Item 5(d) Executive 11 February 2009 in Government expenditure in the short term, designed to help stimulate economic growth to counter the recession. 8. Borrowing Strategy Latest Cash Flow projections indicate a likely deficit at the end of the current financial year, which will be funded by temporary borrowings. This, coupled with the funding requirements of the 2009/10 Capital programme, will more than likely mean that the City Council will need to undertake more permanent borrowing during the next financial year. Current and projected low Bank Rates, however, are likely to create a major problem for authorities. Investment returns have fallen to levels around the 1% to 2% mark, but long-term borrowing levels are generally in a range between 3% and 4.5%.

The City Treasurer is proposing a borrowing strategy to address this problem, which takes advantage of PWLB Variable rate borrowing facilities. The PWLB has two types of loan available to authorities:-

• Fixed rate loans on which the rate of interest is fixed for the life of the loan . • Variable rate loans, on which the rate of interest is variable at one, three or six monthly intervals. Once chosen by the borrower, the interest period to be linked to and the interest payment period will remain unchanged throughout the life of the loan. The Variable interest rates are at similar levels to temporary investment rates available in the Money Markets. The maximum loan period is 10 years. Additionally, authorities have the option of repaying these Variable rate loans, in full or in part, at any time before the maturity date, and replacing them with Fixed rate loans.

In an interest rate environment where long-term rates are expected to reduce in the next 12 months, the City Treasurer will look to take advantage of this facility to secure borrowing at interest levels more in line with expected investment returns. Interest rate forecasts will be monitored during the next financial year, to ensure that longer term borrowing is then undertaken at the most advantageous times.

Whilst the Council has, in the past, made substantial use of market funds, it is unlikely that these will provide a major source in the coming year..That said, alternative borrowings are being contemplated, the availability and terms of market loans will be explored.

9. Minimum Revenue Provision (MRP) Strategy

The Council is required to make provision for repayment of an element of the accumulated General Fund capital spend each year through a revenue charge (the Minimum Revenue Provision - MRP), although it is also allowed to undertake additional voluntary payments. CLG Regulations require full Council to approve an MRP Statement . This will need to be approved in advance of each year. If the Council wishes to amend its policy during the year, this would need to be approved by full Council. A variety of options are provided to councils to replace the existing Regulations, so long as there is a prudent provision. The Council is recommended to approve the following MRP Statement:- • For non HRA capital expenditure incurred before 1 April 2008 or which, from 1 April 2008, will be supported capital expenditure, the MRP policy will be: Manchester City Council Item 5(d) Executive 11 February 2009

• Existing practice - MRP will follow the existing practice outlined in former CLG Regulations.

• For non HRA capital expenditure incurred from 1 April 2008, for all unsupported borrowing, the MRP policy will be:

• Asset Life Method – MRP will be based on the annuity method, which links MRP to the flow of benefits from an asset, starting in the year after the capital expenditure is incurred or, in the case of provision of a new asset, the MRP would begin in the financial year following the one in which the asset becomes operational .

• For non HRA capital expenditure from 1 April 2008, funded by borrowing, which is capital by virtue of a Ministerial direction, or is capital expenditure which does not create a council asset, MRP will be provided as follows, starting in the year after the capital expenditure is incurred or, in the case of the provision of a new asset, the financial year following the one in which the asset becomes operational .

Expenditure type Maximum period over which MRP to be made

Expenditure capitalised by virtue of a 20 years. direction under s16(2)(b).

Regulation 25(1)(a). Expenditure on Same period as for computer hardware. computer programs.

Regulation 25(1)(b). Loans and grants The estimated life of the assets in relation to towards capital expenditure by third which the third part expenditure is parties. incurred.

Regulation 25(1)(c). Repayment of 25 years or the period of the loan if longer. grants and loans for capital expenditure.

Regulation 25(1)(d). Acquisition of 20 years.* share or loan capital.

Regulation 25(1)(e). Expenditure on The estimated life of the assets. works to assets not owned by the authority.

Regulation 25(1)(ea). Expenditure on The estimated life of the assets. assets for use by others.

Regulation 25(1)(f). Payment of levy on 25 years. Large Scale Voluntary Transfers (LSVTs) of dwellings. Manchester City Council Item 5(d) Executive 11 February 2009 * The recommended policy is in line with the regulations, but it is recommended that the policy in relation to Regulation 25(1)(d) items should be amended to equal the estimated life of assets associated with the acquisition expenditure.

CIPFA is currently consulting on whether International Financial Reporting Standards in relation to PFI schemes should be introduced for 2009/10. If this is agreed,it is likely that most PFI assets would be on balance sheet. MRP is chargeable for any general fund assets that are on the balance sheet. There are proposals to mitigate this through the use of an MRP adjustment, to ensure there is no net effect on the amount charged to the Council tax.

10. Annual Investment Strategy

Investment Policy

The Council will have regard to Government Guidance on Local Government Investments (The Guidance), issued in March 2004, and CIPFA’s Treasury Management in Public Services Code of Practice and Cross Sectoral Guidance Notes (CIPFA TM Code).

Investment Principles • As the general policy objective for the Council is the prudent investment of its treasury balances, its investment priorities are (a) the security of capital and (b) liquidity of its investments. • As a general rule, temporary borrowing will not be undertaken whilst the City Council has temporary investments. • The Council will aim to achieve the optimum return on its investments commensurate with proper levels of security and liquidity. • The Guidance points out that the borrowing of monies purely to invest or on-lend and make a return is unlawful and this Council will not engage in such activity. These principles would be important in normal circumstances, but the last twelve months or so have been anything but. The Icelandic banks crisis, which did not impact on the City Council, along with the financial difficulties faced by UK and international banks, have placed security of investments at the forefront of Treasury Management investment policy. In order to achieve a higher level of security, the City Treasurer has introduced a number of measures:-

• Investments to be restricted to UK banks, building societies, local authorities and UK Government institutions. • Diversify the investment portfolio into more secure UK government and government backed investment instruments. • Although current investment strategy allows investments up to 364 days, restrict deposits to as short a time period as feasible.

There is a price to pay for an increased level of security, however. Greater security, and reduced exposure to risk, can only be achieved at the cost of lower rates of return. Manchester City Council Item 5(d) Executive 11 February 2009 Members are asked to note the revised Treasury Management investment strategy. Specified and Non-Specified Investments Investment instruments identified for use in the financial year are listed below under ‘Specified’ and ‘Non-Specified’ Investments categories.

Specified Investments

All such investments will be sterling denominated, with maturities up to maximum of 1 year, meeting the minimum ‘high’ rating criteria where applicable.

Minimum ‘High’ Credit Use Criteria Term deposits – banks and * Varied In-house building societies ** Term deposits – other Local High security. Only one In-house *** Authorities (LAs) or two LAs credit rated Debt Management Agency UK Government Backed In-house - Deposit Facility £100m limit Nationalised banks UK Government Backed In-house Certificates of deposits issued by UK Government explicit In-house banks and building societies guarantee covered by UK Government guarantees

* Banks - Fitch : Long-Term A, Short-Term F1/F1+, Support 1,2,3; Moody’s : Short-Term P-1. Building Societies - Fitch : Long-Term A – or Moody’s : Long-Term A3 ** If forward deposits are to be made, the forward period plus the deal period should not exceed one year in aggregate. *** Limit of £10m for District Councils, £20m for all other types of authority.

Manchester City Council Item 5(d) Executive 11 February 2009 Non-Specified Investments

Non-specified investments are any other type of investment (i.e. not defined as specified above).

The only Non-specified investments the Council will make use of are term deposits with unrated building societies with assets in excess of £1 billion. A maximum limit of 20% of average total investments at any one time is in place for these non rated institutions, with an £8m individual limit for each institution and a maximum investment period of 90 days.

Investment Limits

As advised by Sector, our treasury advisers, the financial investment limits of banks and building societies are linked to their Fitch long-term ratings (or Moodys long-term ratings in the case of building societies), as follows:-

Banks AA+ £20 million AA/AA- £15 million A+/A £10 million Building Societies Fitch A- £10 million (or Moodys long-term A3) excluding Nationwide Building Society, whose AA- Fitch long-term rating warrants a higher (£15m) limit.

Liquidity

Based on cash flow forecasts, the level of cash balances in 2009-10 is estimated to range between £0m and £50m. The higher level can sometimes arise where, for instance, the City Council takes advantage of favourable long-term interest rates to borrow in advance of need. Giving due consideration to the Council’s level of balances over the next year, the need for liquidity, its spending commitments and provisioning for contingencies, it is considered very unlikely that the Council will have cash balances to invest other than on a temporary basis. For this reason, no cash will be held in term deposit maturities in excess of 1 year. . In some instances, it is more cost effective to utilise cash resources to minimise the need for external borrowing and this option will be regularly considered by the City Treasurer.

Discussions are also ongoing with the Council’s bankers (Co-op) with regard to an enhanced overdraft / short-term loan facility, to enable isolated substantial capital payments to be funded, pending longer term strategies being put in place.

Manchester City Council Item 5(d) Executive 11 February 2009

Security of Capital: The use of Credit Ratings

Credit quality of counterparties (issuers and issues) and investment schemes will be determined by reference to credit ratings published by Moody’s and Fitch rating agencie s. The Council’s minimum long-term, short-term and other credit rating criteria, which are considered sufficient for each category of investment, will be adhered to at all times. Monitoring of credit ratings: A All credit ratings will be monitored on a continual basis and reviewed monthly. The Council is alerted by Sector, its external Treasury Management advisors, to changes in Moody’s and Fitch ratings. B If a downgrade results in the counterparty/investment scheme no longer meeting the Council’s minimum criteria, its further use as a new investment will be withdrawn immediately. C If a counterparty/investment scheme is upgraded so that it fulfils the Council’s criteria, the City Treasurer will have the discretion to include it on the lending list. In past years, the use of credit ratings was deemed sufficient to ensure the security of investments for all institutions. This is not the case now, and a number of other important issues also need to be taken into consideration:- 1 Since the credit crunch crisis, a number of banks have been nationalised. An assessment of their suitability for investing with, based purely on their credit ratings, would show that they no longer meet our minimum credit rating criteria and should be removed from our lending list. Nationalisation of these banks, however, means they effectively take on the creditworthiness of the UK Government itself, i.e., deposits made with them are effectively being made to the UK Government. The financial limits of these banks have also been increased to reflect the higher levels of security. 2 The Northern Rock crisis and the Icelandic banks fiasco have shown deficiencies in relying exclusively on credit ratings, which are reactive and only respond after the event. In order to protect the security of the Council’s investments, a further check has been introduced. Where market intelligence gives an early indication that a bank or building society could soon start to experience financial difficulties, that institution is removed from our lending list for a period of 3 months, subject to review thereafter. 3 Even though the UK Government has underlined its determination to ensure the security of the UK banking system by supporting eight named banks with a £500bn support package, it has not given a blanket guarantee on all deposits. The investment instruments included in the Specified Investments table above referred to as “covered by UK Government guarantee” are included only because they have an explicit Government guarantee. 4 Credit Default Swap (CDS) spreads are scores, which are allocated to banks, which can be translated into the likelihood of that institution defaulting on their loan repayment obligations. The higher the score, the Manchester City Council Item 5(d) Executive 11 February 2009 greater the likelihood of default. Sector currently have in place procedures where CDS spreads can be provided, using information sourced from the financial markets, for individual establishments. They are looking to develop this system still further, to include all establishments on their credit rating list. The feasibility of accessing and using this CDS spreads data system will be explored.

Investment Strategy to be followed in-house

Bank Rate started on a downward trend, from 5.75%, in December 2007, with further cuts of 0.25% in February and April 2008, then 0.5% in October, 1.5% in November, 1% in December and 0.5% in January, to reach its current level of 1.5%. Further cuts of 1.5% are expected during the first quarter of 2009. Bank Rate is then expected to stabilise at 0.50% until starting to rise gradually, with the first increase in quarter 2 of 2010 and, then, to be back up to 4.00% during the first quarter of 2012. The Council will seek to utilise its ‘business reserve accounts’ with major banks and short-dated deposits (overnight to 3 months) in order to benefit from the compounding of interest.

End of year Investment Report

At the end of the financial year, the Council will report on its investment activity as part of its Annual Treasury Report.

11. Recommendations To note the proposed Treasury Management Strategy Statement and approve:- • The Prudential Indicators referred to in section 3 and listed in Appendix 4 to Annex 1 of this report. • The Borrowing Requirements listed in section 5. • The Borrowing Strategy outlined in section 8. • The MRP Strategy outlined in section 9. • The Annual Investment Strategy detailed in section 10. Manchester City Council Item 5(d) Executive 11 February 2009 Appendix A

INTEREST RATE FORECASTS

The data below shows a variety of forecasts published by a number of institutions, including those of UBS and Capital Economics (an independent forecasting consultancy). The forecast within this strategy statement has been drawn from these diverse sources and officers’ own views.

Sector View interest rate forecast – 6 December 2008

Capital Economics interest rate forecast – 12 January 2009

UBS Economic interest rate forecast (for quarter ends) – 12 December 2008

Manchester City Council Item 5(d) Executive 11 February 2009 Appendix B Glossary of Terms

Authorised Limit - This Prudential Indicator represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It reflects the level of borrowing which, while not desired, could be afforded in the short term, but is not sustainable. It is the expected maximum borrowing need, with some headroom for unexpected movements.

Bank Rate – the rate at which the Bank of England offers loans to the wholesale banks, thereby controlling general interest rates in the economy.

Counterparty – one of the opposing parties involved in a borrowing or investment transaction

Credit Rating – A qualified assessment and formal evaluation of an institution’s (bank or building society) credit history and capability of repaying obligations. It measures the probability of the borrower defaulting on its financial obligations, and its ability to repay these fully and on time.

Discount – Where the prevailing interest rate is higher than the fixed rate of a long- term loan, which is being repaid early, the lender can refund the borrower a discount, the calculation being based on the difference between the two interest rates over the remaining years of the loan, discounted back to present value. The lender is able to offer the discount, as their investment will now earn more than when the original loan was taken out.

Fixed Rate Funding - A fixed rate of interest throughout the time of the loan. The rate is fixed at the start of the loan and therefore does not affect the volatility of the portfolio, until the debt matures and requires replacing at the interest rates relevant at that time.

Gilts - The loan instruments by which the Government borrows. Interest rates will reflect the level of demand shown by investors when the Government auctions Gilts.

High/Low Coupon – High/Low interest rate

Liquidity – The ability of an asset to be converted into cash quickly and without any price discount. The more liquid a business is, the better able it is to meet short-term financial obligations.

Market - The private sector institutions - Banks, Building Societies etc.

Maturity Profile/Structure - an illustration of when debts are due to mature, and either have to be renewed or money found to pay off the debt. A high concentration in one year will make the Council vulnerable to current interest rates in that year.

Monetary Policy Committee – the independent body that determines Bank Rate.

Operational Boundary – This Prudential Indicator is based on the probable external debt during the course of the year. It is not a limit and actual borrowing could vary Manchester City Council Item 5(d) Executive 11 February 2009 around this boundary for short times during the year. It should act as an indicator to ensure the Authorised Limit is not breached.

Premium – Where the prevailing current interest rate is lower than the fixed rate of a long-term loan, which is being repaid early, the lender can charge the borrower a premium, the calculation being based on the difference between the two interest rates over the remaining years of the loan, discounted back to present value. The lender may charge the premium, as their investment will now earn less than when the original loan was taken out.

Prudential Code - The Local Government Act 2003 requires the Council to ‘have regard to‘ the Prudential Code and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable.

PWLB - Public Works Loan Board. Part of the Government’s Debt Management Office, which provides loans to public bodies at rates reflecting those at which the Government is able to sell Gilts.

Specified Investments - Sterling investments of not more then one-year maturity. These are considered low risk assets, where the possibility of loss of principal or investment income is very low .

Non-specified investments - Investments not in the above, specified category, e.g., foreign currency, exceeding one year or outside our minimum credit rating criteria.

Variable Rate Funding - The rate of interest either continually moves reflecting interest rates of the day, or can be tied to specific dates during the loan period. Rates may be updated on a monthly, quarterly or annual basis.

Volatility - The degree to which the debt portfolio is affected by current interest rate movements. The more debt maturing within the coming year and needing replacement, and the more debt subject to variable interest rates, the greater the volatility.

Yield Curve - A graph of the relationship of interest rates to the length of the loan. A normal yield curve will show interest rates relatively low for short-term loans compared to long-term loans. An inverted Yield Curve is the opposite of this. Manchester City Council Item 5(e) Executive 11 February 2009

Manchester City Council Report for Resolution

Report To: Executive - 11 February 2009

Subject: Housing Revenue Account Budget 2009/10 to 2011/12

Report of: The Interim Director of Housing and the City Treasurer

Summary To present details of the proposed Housing Revenue Account (HRA) budget for 2009/10 and forward indicative estimates for 2010/11 and 2011/12.

Recommendations: The Committee is requested to:

(a) Note the context for the Housing Revenue Account and the related budget and service issues.

(b) Approve the Housing Revenue Account Budget 2009/10 as presented in Appendix 1.

Wards Affected: All

Community Strategy Spine Summary of the contribution to the strategy

Performance of the economy of A healthy and fit for purpose housing market is the region and sub region essential for the economic growth of the City. People living in energy efficient housing in good repair are more likely to stay in good health and so be able to obtain employment and to stay in employment.

Reaching full potential in educa- Appropriate housing to ensuring that residents tion and employment achieve their full potential. Children living in energy efficient housing in good repair and of adequate size are more likely to stay in good health and have suitable conditions and space for studying.

Manchester City Council Item 5(e) Executive 11 February 2009

Individual and collective self es- Quality housing is intrinsically linked to resident’s teem – mutual respect health, well being and feeling about their community.

Neighbourhoods of Choice Improving the quality and management of the housing offer is fundamental to creating neighbourhoods where people choose to live.

Full details are in the body of the report, along with any implications for:

• Equal Opportunities Policy • Risk Management • Legal Considerations

Financial Consequences – Revenue None – the Housing Revenue Account is a “ring-fenced” account.

Financial Consequences – Capital None

Contact Officers:

Name: Joanne Drew Name: David Bentley Position: Interim Director of Housing Position: Head of Finance, Neighbourhood Services Telephone: 234-4811 Telephone: 234-3515 E-mail: [email protected] E-mail:[email protected]

Name: Carol Culley Position: Head of Financial Management Telephone: 234-3406 E-mail: [email protected]

Background documents (available for public inspection): Budget guidelines issued by the City Treasurer CLG Housing Revenue Account Subsidy Circulars Executive Report 13 February 2008 – Housing Revenue Account Budget 2008/09 – 2010/11 Executive Report 27 June 2007 – Final Out-turn of the Housing Revenue Ac- count 2006/07

Manchester City Council Item 5(e) Executive 11 February 2009

1 INTRODUCTION

1.1 The Housing Revenue Account (H.R.A.) budget represents the cost of managing and maintaining the Manchester Housing stock of some 17,600 homes as at 1 st April 2009 (on the assumption that the East transfer has occurred before that date), and should, as a statutory requirement balance taking one year with another. Alongside this requirement to balance are two ongoing pressures that continue to be addressed in the budget strategy for this current year as in last years budget. These pressures are:

• The need to respond to the Government’s Rent Convergence Policy; and • To need to meet the decent homes national PSA target.

The HRA can only contain entries that relate to the landlord function and that are specified; • By Statute • By Statutory Instrument • By the direction of the Secretary of State.

2 STATUTORY DUTIES IN DETERMINING THE HRA STRATEGY

2.1 Section 76(2) of the Local Government and Housing Act 1989, sets out the main duty placed on the Council in relation to the keeping of the HRA and provides that the Council must formulate proposals in respect of HRA income and expenditure for the financial year which, on the best assumptions and estimates that the Council is able to make at the time, ensure that the HRA does not show a debit balance.

2.2 Under S74 of the local Government and Housing Act 1989, the Council, as a Local Housing Authority, is required to keep a Housing Revenue Account in accordance with proper practices. The Council has the responsibility to determine a strategy that is designed to ensure that the HRA is in balance taking one year with another. In doing so, they should take into account the following issues:

• The need to determine rent levels for 2009/10 having regard to the obligations placed on the Council to set rents at reasonable levels (Section 24 of the Housing Act 1985) and the introduction in 2002 of the Government's policy on rent restructuring for social housing. The Government policy has been reviewed and as a result the target rent levels have been amended. This budget takes account of the revised targets.

• The need to pursue sound accounting practices.

2.3 Since 1 April 1990, under the provisions of the Local Government and Housing Act 1989, the Housing Revenue Account has been ring-

Manchester City Council Item 5(e) Executive 11 February 2009

fenced. This means that it must, in general, now balance on a year-to- year basis, so that the costs of running the Housing Service, in terms of debt charges and management and maintenance expenditure, must be met from income for the account in any given year. The main source of income, other than rent, is government subsidy, which is computed from the notional HRA, comprising the government's view of expenditure that an Authority should have, and the level of rents that should be set. The HRA is therefore reliant on the Government's subsidy rules. The current economic climate (particularly the RPI at September 2008) has impacted upon the Governments’ strategy for achieving target rents, with convergence now forecast to be by 2023/24. However CLG have stated that they propose to return to an earlier convergence date in 2010/11, assuming that economic conditions permit.

3 PROGRESS AGAINST THE BUDGET STRATEGY 2008/09

3.1 The budget strategy that set the base for 2008/09 was based on a rent increase for that year in accord with, and making appropriate progress towards, the Government's rent convergence target whilst maintaining service and investment levels. The strategy also made certain assumptions:

• efficiency savings • a reduction in revenue contributions to the capital programme (RCCO)

The budget for 2008/09 anticipated the transfer of the inner south estates to City South Manchester Housing Trust and the final large scale stock transfer of the estates East area. Whilst the former did, in fact, take place (and East is still forecast to transfer before 31 March 2009) some minor re-phasing of the Housing Investment Strategy programme, has caused some variances against budget in terms of rental income, repairs and maintenance and subsidy allowances, which results in an improvement to the H.R.A. position. However investment income will be lower than that budgeted due to the recent reduction in interest rates. The net effect of the above is forecast to be broadly neutral

3.3 In line with previous approvals the HRA also funded replacement windows in the Hendham Vale area (via RCCO)

3.4 There are also additional reserves brought forward from 2007/08 following completion of the final subsidy claim.

Manchester City Council Item 5(e) Executive 11 February 2009

4 BUDGET STRATEGY 2008/09 – 2010/11

4.1 The resource implications of the Budget Strategy are displayed in detail within Appendix 1. The table shows statutory compliance in that a credit balance is forecast at the end of each year within the Budget Strategy period. A credit balance is necessary in order to protect the Council from future risk e.g. a reduction in the level of housing subsidy. The budget for 2009/10 is informed by the Final Determination issued by CLG

4.2 As can be seen, during 2009/10 there is forecast to be an excess of income over expenditure of some £429k, which will flow into reserves.

4.3 In recent years it has been possible to make additional payments into the reserves of existing PFI schemes in order to mitigate the pressure on the HRA in forward years. Further additional payments are proposed throughout the period covered by this report.

4.4 At its meeting in November 2008, Executive agreed a report proposing a 31% increase in charges to residents living in homes serviced by the Councils’ communal domestic heating schemes effective from January 2009. The report stated that following revisions to the model for calculating heating charge increases and further increases in the Councils’ gas cost, the net cost to be born by the H.R.A. was likely to be £460k in 2008/09. This is forecast to rise to £498k in 2009/10 and is contained within the table at Appendix 1.

4.5 The key budget strategy principles are as follows:-

5 Rent Levels

5.1 Within the HRA, rent restructuring to achieve social rent reform continues. However, due to the high rate of RPI at September 2008, there are now uncertainties surrounding convergence date. The city wide average planned increase for 2009/10 is 5.64% (2008/09 4.92%). This compares favourably with the CLG assumption of a 6.2% fixed average percentage increase in the Guideline Rent which is used for Subsidy purposes.

The above increase has been included in the Budget presented at Appendix 1.

5.2. It is proposed to apply the 5.64% increase to charges associated with rent i.e. garage, furniture and service charges.

Manchester City Council Item 5(e) Executive 11 February 2009

6 Total Management Costs

6.1 The management costs, shown in the appendix, include the estimates of the cost of the Management Fee paid for the management and maintenance of our properties by Northwards Housing (the ALMO) and is now reported separately.

7 Housing Investment Strategy

7.1 Overall the City would have required some £1 billion over the period to 2010/11 to bring the Manchester’s housing to a good standard and maintain them to meet the “decent homes” national PSA target. The PSA target could not be delivered on traditional resources alone and, as such, the Housing Investment Options has been initiated and is progressing. This budget strategy reflects the programme of:

• The successful completion in Dec 2005 of the transfer of management to Northwards Housing Trust of some 13,000 properties in the north area. Also, the successful completion in October 2006 of the transfer of the West Wythenshawe estates, some 6,000 properties, to Parkway Green Housing Trust and during the current financial year some 6,000 properties were transferred to Southway Housing Trust.

• During 2008/09, the inner south estates have been transferred to City South Manchester Housing Trust and the final large scale stock transfer of the estates east areas is planned to transfer by the end of the financial year.

• The completion of the Brunswick PFI is anticipated during 2010/11. The planned date for completion of the Collyhurst PFI is Spring 2012.

• Transfer of the remaining stock in West Gorton along with a number of “miscellaneous properties” will be ongoing through this budget period

8 Cost of Pay Award

8.1 The cost of implementing the outcome of the job evaluation put pressure on all services and will continue to do so until the reduction in the level of pay protection starts to impact. However, this cost has been funded without detriment to the services.

9 Housing Subsidy Grant

9.1 Housing Subsidy Grant is delivered on an annual basis. Whilst the budget is based on the recently issued Final Determination there is no

Manchester City Council Item 5(e) Executive 11 February 2009

certainty beyond this in either formula or resources allocated. Within the Grant, the major allowances were increased by a range of factors (Major Repairs Allowance by 6.91%, Management Allowance by 2.81% and Repairs Allowance by 2.34%)

The HRA subsidy determination is calculated on the Notional HRA, which is the Governments’ assumptions about the Authority’s housing stock.

Members should be aware that Government has recently been conducting a review of HRA finance. The purpose of the review is to ensure that there is a sustainable, long term system for financing council housing and that the system is consistent with wider housing policy including the establishment of a regulator of social housing. The review is not due to make its final report until spring 2009, however early indications suggest that some form of debt redistribution coupled with self-financing is the current preferred option. Notwithstanding this, in the absence of any firm indications, the forward strategy beyond the budget year is based on the assumption of an annual 2% increase in the existing methodology.

10 Revenue Contribution to Capital Outlay (RCCO)

10.1 With the substantially reduced public sector programme of investment required, no provision has been made for those elements of maintenance spend that would have been complementary to a capital programme.

10.2 A revenue contribution to capital outlay is provided for (in 2009/10 only) relating to the capital works planned for the Hendham Vale area in order to carry out the necessary capital works within that area. The funds to carry out this work are being made available, as agreed, from the M60 compensation monies received and retained in a discrete fund within the HRA Reserve.

11 Provision for Bad Debts

11.1 Following agreement with the external auditors, the provision for bad debts was revisited at the end of 2007/08 and the overall provision is now based on the CIPFA formula. The budget year contains a further contribution based on 1% of the budgeted rental income.

12 Budget Risks

12.1 The resources provided for within the strategy are in line with the planned reductions in stock. There are risks, however, if;

resources cannot be reduced accordingly e.g. staff numbers do not reduce in line with stock reductions,

Manchester City Council Item 5(e) Executive 11 February 2009

the housing investment options programme changes, recharges from service departments within the Council may not reduce strictly in line with the lower demand for those services.

12.2 Any changes to resources required will need to be found from savings/efficiencies generated within the HRA.

12.3 Interest rates have shown a recent significant reduction during the current economic down-turn. The budget for both interest payable and receivable has been set to reflect this. The assumption is that the low rates currently being experienced will continue for the period covered by this report.

12.4 The Budget Strategy makes several assumptions in regards to the rental income. This income figure is therefore subject to the fact that right to buy sales have reduced substantially over the last year and the forecasts of sales have been similarly reduced, however, demand may rise again and may exceed that budgeted and thereby lead to loss of rental income. Similarly, repairs and maintenance costs and subsidy income will also change.

12.5 Amortised Premia (net of Discounts) Premiums are payable when loans are redeemed early and the lender can only re-lend at a lower rate of interest. Whereas discounts are receivable when loans are redeemed early and the lender can re-lend at a higher rate of interest.

12.6 Strategic Housing Implementation Programme (S.H.I.P.) In terms of the H.R.A. the main impact of the S.H.I.P. work streams has been to recognise the transfer of the Homelessness function within the budgets.

13 CONCLUSION

13.1 The proposals contained in this report will ensure service delivery and investment is maintained. In the context of future restrictions on the HRA the recommendations will help secure HRA services for several years to come.

13.2 Under the provisions of the Local Government and Housing Act 1989, the Authority must ensure that the HRA does not result in a debit balance. The proposed budget for 2009/10 and the two following years, displayed in Appendix 1. shows this provision being met.

Manchester City Council Item 5(e) Executive 11 February 2009

14.0 Contributing to the Community Strategy

(a) Performance of the economy of the region and sub region A healthy and fit for purpose housing market is essential for the economic growth of the City. People living in energy efficient housing in good repair are more likely to stay in good health and so be able to obtain employment and to stay in employment. Setting rents at an appropriate, affordable level will assist in this.

(b) Reaching full potential in education and employment Appropriate housing is vital to ensuring that residents achieve their full potential. Children living in energy efficient housing in good repair and of adequate size are more likely to stay in good health and have suitable conditions and space for studying. Setting rents at an appropriate, affordable level will enable tenants to live in locations which meet their aspirations in terms of education and employment.

(c) Individual and collective self esteem – mutual respect Quality housing is intrinsically linked to residents’ health, well being and feeling about their community. Setting rents at an appropriate, affordable level will assist in this.

(d) Neighbourhoods of Choice Improving the quality and management of the housing offer is fundamental to creating neighbourhoods where people choose to live. Setting rents at an appropriate, affordable level will enable tenants to live in locations which meet their aspirations in terms of preferred neighbourhood.

15.0 Key Polices and Considerations

(a) Equal Opportunities None

(b) Risk Management Under the provisions of the Local Government and Housing Act 1989, the Authority must ensure that the Housing Revenue Account does not result in a debit balance. The proposal rent setting within this report – together with regular budget monitoring – will assist in managing this risk.

(c) Legal Considerations The City Solicitor has reviewed this report and provided a commentary which has been incorporated within.

Manchester City Council Item 5(e) Executive 11 February 2009

APPENDIX 1 Housing Revenue Account 2009/10 – 2010/11 2008/09 2009/10 2010/11 2011/12 Forecast Plan Plan Plan £000s £000s £000s £000s

Balance brought forward -39,377 --39,934 -40,363 -40,733

Income Rental Income -68,590 -55,951 -57,071 -58,212 Other Income - contributions -17,447 -1,718 -1,752 -1,787 Service Charges -18,283 -5,154 -5,257 -5,362 Major Repairs allowance -12,041 -9,538 -8,947 -8,553 Housing Subsidy Retained Stock and P.F.I. -22,617 -15,124 -15,794 -15,389

Total Income -138,978 -87,485 -88,821 -89,303

Expenditure Maintenance and Repairs 10,636 4,299 4,385 4,473 Maintenance and Repairs - Northwards 11,901 12,128 12,371 12,618 P.F.I. Contractor Payments 15,864 15,667 19,398 18,478 Supervision and Management 51,353 17,488 17,838 18,195 Supervision and Management - Northwards 7,834 8,023 8,183 8,347 Council Tax, Chief Rents 139 146 149 152 Contribution to Bad Debts Reserve 620 560 571 582 Depreciation 17,728 10,888 10,888 10,888 Debt Management Expenses 343 360 367 375

Total Expenditure 116,418 69,559 74,150 74,108

NET COST OF SERVICE ( - ) = surplus -22,560 -17,926 -14,671 -15,195

Interest payment and similar charges 24,723 18,614 17,692 18,786 Amortised Premia (net of discount) 3,581 106 -894 -1,110 HRA Investment Income/Mortgage Interest -1,299 -558 -556 -555 Sub-total 27,005 18,162 16,242 17,121

Revenue Contribution to Capital Outlay 685 685 0 0 Excess of Depreciation over Major Repairs Allowance -5,687 -1,350 -1,941 -2,335 Sub-total -5,002 -665 -1,941 -2,335

In-year balance ( - ) = surplus -557 -429 -370 -409

CUMULATIVE BALANCE CARRIED FORWARD -39,934 -40,363 -40,733 -41,142

Analysis of cumulative balance carried forward General Reserve 3,950 2,762 2,482 140 Earmarked General Reserve 1,530 1,530 1,530 1,530 P.F.I. Reserves General Reserve 3,200 3,200 3,200 3,200 Ardwick 14,355 15,447 15,925 16,357

Manchester City Council Item 5(e) Executive 11 February 2009

Heating 1,748 1,641 1,456 1,266 Miles Platting 11,988 12,489 12,846 13,355 Brunswick 1,527 1,590 1,590 3,590 Collyhurst 1,636 1,704 1,704 1,704

Total Reserves 39,934 40,363 40,733 41,142