With a couple of days to go until the Autumn Statement on 30 October, the city treasurer at Manchester City Council calls for consistent, reliable funding as local authorities grapple with rising costs and ongoing uncertainty.
“Stability and simplicity are two of the key things” local authorities need from the government, argues Tom Wilkinson, city treasurer at Manchester City Council.
As the new Labour government prepares to announce its Autumn Statement on Wednesday (30 October), and with the local government finance settlement approaching, councils across England are actively seeking longer term certainty as financial pressures continue to build.
Sitting down with Room151, Wilkinson expresses concern that some may assume, given that Manchester is a Labour council, that local government finances will automatically improve now that there’s a Labour government in power.
However, looking at predictions from the Institute for Fiscal Studies, the Office for Budget Responsibility, and the reported £22bn “black hole”, which doesn’t seem to include the SEND deficit, Wilkinson warns the picture “doesn’t look hopeful” seeing as local government is an unprotected service.
“I personally am not expecting anything wonderful to arrive from the Autumn Statement or settlement in December for us,” he tells Room151.
Currently, Manchester faces a “challenging” budget gap of £29m for 2024/25, increasing to a gap of £41m by 2026/27. Wilkinson explains that officers were tasked with identifying a stretched target of £50m in savings options, noting that the council is progressing well in finding these for members to consider following the outcome of the Autumn Statement.
Housing151 | March 2025 | Local authorities. Building homes
Placement pressures
“What’s hurting us really is the mix of children’s placements and home to school transport costs,” Wilkinson says. Within children’s services, external residential placements are presenting the biggest pressure on Manchester’s budget, currently projecting an overspend of £9.2m.
Recently, Manchester has seen a shift of children being placed in external residential and away from fostering placements, “which is extremely expensive”, Wilkinson highlights. What is really needed in children’s and adult social care is “disruption of the market”; six years ago an expensive placement was £6000 a week, now that is the average placement cost, he says.
Manchester City Council is currently seeking opportunities within its estate to create children’s homes, and is working with the Greater Manchester Combined Authority (GMCA) to create cross GM capacity, although it is “struggling” to get registered managers and staff for the homes.
In addition to pressures from children’s social care, Wilkinson highlights that homelessness and the “broken system” of council tax are also straining Manchester’s budget and are likely to add further pressure in the future.
“Homelessness is not causing us an overspend now, but I can only see growing pressures there. So, it might not be a problem this year, but there’s that pent-up demand that other councils are experiencing,” he adds.
‘No rabbit out the hat at eleventh hour’
Moving on to the Autumn Statement and the provisional local government finance settlement, which is expected in December, Wilkinson stresses that two things are needed from the government: “stability and simplicity”.
Wilkinson explains that “certainty” of funding, which can be provided through longer-term settlements is key to being able to properly plan.
“It’s been a one-year process each time, so we have had to second guess a lot.
“You’re trying to take the organisation through and plot the best path in terms of what you think the budget gap will be and what options are available to help close that. But then, quite often, there’s a rabbit out of the hat at the eleventh hour in terms of the settlement and we’ve seen it several times.”
An example of this is the Household Support Fund, which was intended as a one-off and was brought about during Covid-19. We have now had six rounds of this funding, Wilkinson explains.
“If we knew there would be six rounds, we would have properly staffed up and planned. We’ve got elements of the workforce under pressure because we’ve just been trying to absorb extra without growing the service where it’s needed.”
Wilkinson points out that councils have 200 different individual grant funding streams, of which “in theory, a lot of them are one-off, or we don’t know whether they will continue”.
This has put pressure on the business as usual as “we’re trying to deal with new government initiatives”, Manchester’s city treasurer says.
“So, consolidating some of these various grant streams, which do take time to administer, and rolling it into a broader settlement to allow us to get on and deliver” as well as a long-term settlement is what is needed from the government, says Wilkinson.
“Stability is really one of the key things and simplicity in terms of the grants.”
The new government has pledged to provide councils with multi-year funding settlements; however this will not come in the next financial year but in 2026/27.
Audit: ‘not a good look for the sector’
Another current challenge is local government audit, and with the backstop date approaching, Wilkinson argues that the anticipated number of disclaimed accounts is “concerning” not just for individual councils but for the entire sector.
“It’s not going to be a good look for the sector, but it isn’t local government’s fault, it’s from external factors, particularly the under-resourcing of external audit and increased scrutiny of auditors by the Financial Reporting Council,” he says.
At the beginning of September, the government tabled legislation in Parliament to address the significant delays in local authority audits. This followed a written ministerial statement by Jim McMahon on 30 July 2024 outlining a series of proposed backstop dates, with a provision for disclaimed opinions to address the audit backlog.
Reflecting on the government’s proposals for clearing the audit backlog, Wilkinson acknowledges the “need for a clean slate”, but warns that it could negatively impact the sector in terms of external borrowing and how the market views councils.
Wilkinson also stresses the need for the government’s reforms to go further, making financial accounts “readable and simple to understand”.
“I think every year, since I started in local government in 1997, it seems that accounts have become ever longer and ever more complicated, and despite that, you’ve seen a number of councils fall over because they’ve taken too much risk.
“So, something’s missing somewhere,” he says.
Wilkinson highlights that people signed off on those deals and “no audit process had prevented them either”. Since 2018, section 151 officers at nine councils have had to issue section 114 notices.
“So, there is something about the need for a reset,” he adds.
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