Additional Conten from Declan Carey, Chris Gee, Charlotte Hall, and Nick Jackson.
Gloomy outlooks, grim predictions, and dire warnings have become a feature across Greater Manchester town halls.
For years, councils have talked about tightening their belts in the face of government funding cuts. Now, councillors fear they’re ‘at the cliff edge’. The word ‘unsustainable’ has been used by two council chiefs. One leader says ‘there’s nothing left to slice off’ in trying to make ends meet.
Unlike the government, local authorities cannot borrow to finance day-to-day spending. Legally, they must pass a balanced revenue budget — where outgoings are covered by income.
And officials in Greater Manchester say it’s getting harder and harder to do that. Worryingly, a quarter of English councils say they’ll ask for a government bailout soon.
Officers are therefore anxiously awaiting the Chancellor’s October 30 budget — so how are Greater Manchester’s finances faring?
What’s the situation in Greater Manchester?
It’s a mixed picture. The largest council, Manchester, projects it will face a £65 million budget black hole by 2028.
This year, it’s facing an £17.4m overspend, which will deplete its reserves down to £6.5m if £50m of cuts are not made.
The other city, Salford, also has an in-year overspend. Its earmarked reserve has £6.8m left.
Bolton is staring down a £7.4m budget shortfall next year, but leader Nick Peel ‘suspects it will probably be more than that’.
Next door, Bury is facing a £22m gap, and needs to spend £15m of reserves in the next two years. It’s a similar picture in Rochdale, which has ‘estimated budget gaps of £2.8m for 2025/26, rising to £20m by 2027/28’.
Crisis-hit Tameside council hasn’t updated its position recently, but previously said it ‘projected new budget reductions were £17.3m in 2025/26, increasing to £67.6m in 2028/29’.
Oldham has overspent by £21m this year, and is struggling to make £3.8m of the £20m cuts needed last year. It’s forecast to have £41m left in its reserve.
However, some are in ruder health. Wigan has reserves of £100m left, and only a £17.9m budget black hole expected next year.
Stockport has a lot of reserves remaining at £82.5m. Trafford has £53m left in its reserve. Both will provide breathing room.
How has it come to this?
Central funding to councils was cut in 2010 by the coalition government, continued by successive Conservative Chancellors. In the north, local authorities often point out they suffered deeper-than-average cuts.
Manchester’s City Treasurer, Tom Wilksinson, said earlier this month: “If we had the average cut we would have £74m more. We have been disproportionately affected by austerity.”
However, austerity is not why they’re at the ‘cliff edge’. Since the pandemic, costs and demand have surged in children’s services, adult social care, and special education needs.
For example, in Oldham, an external children’s placement cost £6,629 per week in February 2024. 12 months earlier, the same placement cost £5,128 per week — an inflation rate of 29 percent.
Why not just use the reserves?
Some councils — like Wigan, Trafford, and Stockport — have healthy coffers, prompting questions why they don’t raid reserves.
Officials are often uneasy about spending these because they can only be spent once. Furthermore, a smaller reserve gives councils a smaller ability to cope with emergencies.
If, for example, widespread flooding hit a borough, emergency housing could be paid for by the reserve. If there’s no reserve left, it would require emergency cuts to day-to-day budgets.
How many will need a bailout?
Nationally, a Local Government Association study has found one in four English councils are likely to apply for an emergency government bailout to stave off bankruptcy in the next two financial years.
Already, 18 authorities have asked the government for exceptional financial support (EFS), which allows councils to borrow from the ‘capital budget’ to fund ‘revenue’ spending — in effect, taking money from the pot of cash for long-term projects which can be paid for by borrowing to make ends meet in the day-to-day budget which cannot.
Nearly half (44 percent) of councils in the study said they would need EFS if government grants don’t increase this year.
In Greater Manchester, the LDRS contacted every council to see if they are considering applying for EFS. None said they expect to in the next two years.
When will we know more?
October 30 is budget day, when Chancellor Rachel Reeves announces the government’s spending plans for the coming year. That could give some certainty to councils in broad strokes, if there is an increase in local government spending overall.
But individual councils will get their financial settlements, which confirm the amount of central funding they’ll get, in late December. From there, they set council tax rates and aim to pass a budget in March.
It will be an anxious Christmas for some.
