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City Council accounts exposed

Simon Binns on how longer living leads to £783m loss in otherwise decent results

Written by . Published on July 25th 2010.

City Council accounts exposed

Manchester City Council saw its net worth decrease by £783m in the year to March 31, 2010, according to its latest set of accounts.

“Financial assumptions are less favourable in March 2010 than they were in March 2009 and the mortality assumptions have been strengthened to reflect improvements in life expectancy.”

The un-audited accounts, which are available to view in the Town Hall, revealed the major reason for the loss is a pension liability of more than £1bn. Despite this, the council describes its financial position as ‘healthy’ and compared to other local authorities, such as Oldham and Salford councils, there is no mention of a need to trim millions off the budget or sacrifice jobs.

The accounts said that the £638m increase in the valuation of its pension liability is due to the fact that ‘financial assumptions are less favourable in March 2010 than they were in March 2009 and the mortality assumptions have been strengthened to reflect improvements in life expectancy.’

The council’s spending increased to £323m, compared to £257m in 2009, which included borrowings of £143m (2009: £77m) and government grants of £174m (2009: £157m).Reserves dropped by £3.2m to £23m - less than anticipated - which led to a total underspend of £2.7m against its annual budget.

There was a £181m deficit in the amount the council spent and the amount it received, however.

The council’s debt stood at £706m, an increase of £10m, although it still has plenty of room against its agreed limit of £1.1bn.

Sir Howard Bernstein, chief executive of the council, saw his total remuneration package remain static at £203,934.

The next highest paid employee is Richard Paver, treasurer, who receives £154,914.

There were pay rises for Eddie Smith, chief executive of New East Manchester, who saw his salary increase to £120,000 from £102,000, and the city’s solicitor, Susan Orrell, who saw her package jump to £112,000 from £101,000 the previous year.

Excluding members of the senior executive, the council currently employs 12,740 officers and 10,935 teachers. The number of those earning more than £50,000 a year increased to 445 from 422 in 2009. Thirteen of those people saw their annual salary increase through severance pay, however.

Other interesting nuggets from the council’s accounts include the fact that it sets aside £19.8m for compensation claims and is owed £37m in council tax. It also expects never to see £33m of the £298m it is owed by trade debtors.

It has £132m invested in joint ventures including local industry – including companies that own or manage Manchester Airports Group, Manchester Central, Bridgewater Hall, the Urbis building and regeneration company New East Manchester.

It also has a partnership with National Car Parks (NCP) to operate more than 40 locations across Manchester.

The city council owns 25 per cent of the joint venture – which made a profit of £3.6m - and received a dividend of £1.2m for the year. In 2009, it received £1.6m and the year before that it earned £2.2m, totalling £5m in three years.

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8 comments so far, continue the conversation, write a comment.

D KesslerJuly 22nd 2010.

Brilliant! I love figures. More soon, please

Carol VordermanJuly 22nd 2010.

I love figures too! Although £37m owed in Council Tax, wow, that's absurd, talk about being a bit crap at collecting / enforcing payment!

Duke FameJuly 23rd 2010.

It's a disgrace that over 400 council employees earn over £50,000 of our money.

We should remember that council employees are generally those types that are the willing unemployable. I can't see how in such a safe environment that an emplyee can justify a big salary

jayceeJuly 23rd 2010.

The City Council is a very large and complex organisation, if it were compared to a similarly large and complex company in the private sector, the number of highly paid employees would be much higher. And Council employees are a very dedicated and skilled bunch of people, I'm not sure where Duke Fame gets his info from.

gjhJuly 23rd 2010.

Duke Fame. Do you see the irony.... it's a disgrace that they earn a lot (and in an organisation of 25,000 people 400+ on 50k is not a massive amount) & your perception that they employ muppetts?

Duke FameJuly 24th 2010.

Jaycee, the council cannot be compared to the productive sector, it is there to make sure we ave street lights, bins emptied etc and takes a tax to deliver it. It's respponsibility is to do this in an economic, efficient & effective way. It's clear pretty much all councils ffail to do this and Manchester's is no different.

The big difference is a council does not need to compete or deliver a return and sadly, if they fail, they are bailed out by te taxpayer. Employees are also protected by far too strong unions, riddled with weak managment, wonderful non-salary benfits with great employment conditions.

Given this, council employees don't have to make an effort to get ahead/survive and as such really deserve high salaries

D KesslerJuly 25th 2010.

Duke Fame, in my view the council's services have hugely improved over the last decade: the street outside my house is regularly swept, I now have four bins instead of one which allows me to recycle at no extra cost, the local schools around me have got their act together and my local hospital (MRI) is one of the coolest facilities in the country. 50k salary? Peanuts for me!

AnonymousJuly 25th 2010.

Whalley Ranger's appetite for more figures will be satiated very soon when the Government tells the Council to to publish lots more data on line, including all the contracts in the new year. You will be able to see the couple I signed in the primary school,for caretaking where I was a governor (un-paid and no expenses)

The article is odd in it does tell you what the council spends the money on leaving Duke Fame to believe it is all spent on emptying bins and street lights etc. Well the big etcs are education and social services. Most if not all most Head Teachers are paid over £40,000 and they and their deputies(in High Schools) will make up a fair number of the employees earning £50000 or more. But in the next five years Mr Gove will have transfered all this to central govenment expenditure by 2015 I'm sure. Academies pay what they like. Schools of course operate in a competative market and are funded by number of pupils on the books.

As for the council tax deficit I must remember to pay mine on time! Business rates are collected by the Council as an agency. I wonder what the deficit is on those. I notice that the figures for trade debtors are only those written off. But how many others are three months overdue. (the tax payer lends them money)

It is good to see the efficient and effective private sector paying its shareholders 2.2M for car parking control (the profit will be higher... this is only the dividend) but no doubt the contract is actually a revenue sharing one. When I last looked, NCB was part of a private equity outfit but that may have changed now.

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