With next year’s budget in sight, Manchester braces for financial trouble

The city’s finances are in tatters and local officials expect next few years to be their toughest ones yet

Trouble is on the horizon for Manchester’s finances as the City Council lays out the groundwork for the preparation of the 2021/2022 budget. Underlying pressure combined with the troubles caused by the coronavirus pandemic will result in a budgetary shortfall of more than £100m in 2021/22.

According to officials, with cuts and with government assistance, they will be able to balance the books for 2020/21 – but the impact of the economic catastrophe will be felt in full in the following years.

Past troubles combined with current crises

Over the last few years, Manchester’s budget has been faced with several issues – population increase, inflation and demographic change. Together they have created a mix of troubles that the local government has so far successfully been managing. Yet the addition of the economic catastrophe caused by the coronavirus pandemic has pushed the city’s finances over the edge and could eventually lead to disaster.

Thanks to the way Manchester’s economy and budgeting works, the real effects of the economic crisis will be felt not next year, but rather the year after – in the 2021/22 budgeting period. Without significant support from the government and with the costs of social care expected to skyrocket in the near future, the £100m shortfall could lead to a 20% cut in service budgets. On top of a decade of austerity, this will leave the city starved of funding and entirely at the mercy of outside forces.

Sir Richard Leese, Leader of Manchester City Council, explained that “We have navigated through some tough times in the last decade but next year looks set to be the hardest yet.

When it comes to developing proposals to tackle this extremely challenging financial situation we will do this carefully, consultatively and with a clear focus on the people’s priorities for the city which were informed by a major consultation exercise. These are protecting the most vulnerable, delivering the best services we can and early help to support people so they can avoid getting into greater difficulties, all underpinned by inclusive and sustainable job creation. But no one should be under any illusions that this can be achieved without some very difficult decisions.

All of this will require transformational changes to how the council operates and further progress in the drive to sustainably reduce the need for, and the cost of, some of the support services it provides.”

He then further called for a more sustainable approach to the city’s finances, claiming that raiding Manchester’s financial reserves might get them through 2021/22 but that would not be enough. Instead, a more proactive approach by central authorities is needed that recognized the crucial role that the City Council plays in the city’s growth and development.