Manchester City Council has revealed a projected £20m overspend in the 2024/25 budget.
The forecast has increased by £2.6m since its last reported position in September based on revenue at the end of July.
The revenue monitoring report for this month identifies three departments contributing millions in overspending from pressures across social care systems.
Children’s services are forecasting an overspend of £8.7m, which is down half a million from a previous forecast.
The biggest pressure is from external residential placements for looked-after children with demand for placements 16 times higher than budgeted for.
Also, there is an increased demand for home-to-schools transport – increased by 58% since 2021 – and there has been a shortfall in the grant for unaccompanied asylum-seeking children.
Adult social care has an overspend prediction of £10m due to an increase in clients and homecare hours as well as pressures across learning disability services, disability supported accommodation service, and older-person care.
The neighbourhoods department has projected an overspend of £2.9m as a result of a shortfall in funding for preventing homelessness, of which they have appealed to the government for more funds.
Speaking in November’s executive meeting, council leader Bev Craig said: “It is pretty clear to me looking at the last budget that austerity is certainly over, but it does look like the road to recovery will be a long way back.”
The overspend is partly offset by savings and underspending elsewhere – such as in growth and development, which underspent by £395k.
Councillor Rabnawaz Akbar, Executive Member for Finance, has commented: “Rising costs for essential high-cost care services mean that we are experiencing the same unfunded pressures as councils up and down the land, despite the work we have done to improve prevention and manage demand.
“We have put mitigation plans in place to reduce the projected overspend on our revenue budget so hopefully our actual overspend at the end of 2024/25 will be less.
“Careful financial management over the years, which has involved taking some tough decisions, means that we have – with difficulty – managed so far. But this is not sustainable in the long term and we look forward to working with the new Government to not only secure fairer funding in the years ahead but to address the national systemic challenges in the most demand-led services.”
Mitigations introduced by the government includes a caseload review across teams with the aim of containing workforce costs without sacrificing delivery of services.
The home-to-school transport scheme has already made £1m in savings from the introduction of route planning software.
The council currently has a target of £21.374m in savings – 43% of which they have already achieved and a further 27% they have moderate chance of achieving.
Any overspend is funded from the general fund reserve and if the overspend remains at a projected £20m by the end of the financial year, the council’s ability to set a balanced budget for future years would be impeded.
When the 2024/25 budget was approved, the general fund reserve balance was forecasted to be £23.4m for the end of this financial year which would leave just £3.4m if the projected overspend cannot be lowered.
Featured Image: Shikhar Talwar
