Cuts and savings totalling £70 million will have to be found if Brighton and Hove City Council is not to join the ranks of “bankrupt” local authorities like Birmingham, Croydon and Slough.
It may mean that the council can only provide “core” services – or those required by law – such as adult social care.
The budget gap could also be bridged in part by big increases in fees and charges as well as cuts to discretionary services such as beach lifeguards and public toilets.
Previous attempts to save money in these areas earlier this year sparked outrage but the council’s external auditors have issued a stark warning.
A report from Grant Thornton said: “The council is now in a position where it must consider a realignment of priorities to coincide with securing financial sustainability.
“This may involve making politically unattractive or undesirable decisions in the interests of the authority’s future viability.”
Grant Thornton warned of a £70 million budget gap between now and the end of March 2027 – the period covered by the council’s medium-term financial strategy.
The firm’s audit report said that the council’s General Fund, which is used to pay for day-to-day spending, was on course to overspend by £14 million in the current financial year. And the budget gap for next year, 2024-25, was forecast to be £25 million.
In the past three years, the council had set significant savings targets but managed to achieve only about 70 per cent of the planned savings in the 2020-21 and 2021-22. Last year, 2022-23, the figure was just 57 per cent.
Last year, the council overspent by £3 million and had to dip into its financial reserves to balance the budget.
Grant Thornton director Darren Wells told the council’s Audit and Standards Committee on Tuesday said that the council’s financial reserves were below the minimum level required.
Mr Wells told councillors: “You just do not have the flexibility any more to continue to use reserves to meet any forecast overspend.
“In our view, the council is at a tipping point and the position is as bad as I think it can be.”
He said that it was “not an exact science” but the forecasts were realistic and showed the challenges faced by the council in the next few years.
Mr Wells added: “It does mean as a council that you are going to have to make some hard decisions about the level and the breadth of services that you currently provide.
“I do anticipate those judgments will be difficult to make but, unfortunately, I don’t think there is any other choice than for the council to discuss and debate those decisions it wants to make to ensure it continues to be sustainable in the medium term.”
Green councillor Pete West, who chairs the Audit and Standards Committee, said that the situation had reached a “new magnitude of concern”.
He criticised Labour claims that the Greens had been financially lax and said that the budget set in February had been agreed by the whole council, with input from Labour councillors.
Councillor West said: “It is entirely unprecedented what we’ve had to face, with rising demand and inflationary pressures … we moved to reduce spending in-year and there was some success with that.
“It is a truly scary position the council finds itself in. We were saying this a year ago, all of us on the same page.”
Labour councillor Joy Robinson said that the council had to make savings of £13 million last year and “unpalatable” parking charge increases.
Councillor Robinson said: “To make the budget balance is a difficult thing but perhaps we need to man up – or girl up – and actually organise our finances around what we can actually afford.
“We know that’s not going to be a particularly nice thing to do.”
She said that the council needed to keep tight control so as not to end up like the recently “bankrupt” Birmingham City Council – and it needed to keep the public informed so that people understand the seriousness of the situation.
The council’s chief financial officer Nigel Manvell said: “Demand has become a bit of an issue. There are quite significant increases in demand for home to school transport.
“(The number of) children with statements of special needs has increased by 260 per cent over five years.
“These are unprecedented increases in demand – not just suffered by this council – but are regional and national issues.”
Mr Manvell said that long-term budget planning had become harder because the government had reverted to setting council the level of grant funding annually.
The autumn statement is expected in November this year, leaving council officials and political leaders just weeks to prepare the budget to be decided by the full council in February.
Since 2010, Mr Manvell said that the council had made an accumulated £200 million in cuts and savings to its annual budgets.
The council’s annual spending had increased over the same period – and now topped £1 billion including housing and capital spending – but higher inflation meant that costs had risen.
All the money Phelim and Pete spaffed up the walls of green virtue signalling have finally come home to roost. Vote woke, go broke.
“There are unprecedented increases in demand”.
Either the Greens were actually far more prudent than the current Labour council (comparing budget deficits), or perhaps the issue is one of increased demand for services at an increased cost, yet no increase in contributions from central government and a resistance from residents to increased revenues from parking and council tax to cover the shortfall.
From my understanding, the Greens truly were horrible administrators, although I appreciate the balanced opinion there. I suspect both apply to an extent.
All councils will have good and bad councillors, and make good and bad decisions. And sometimes those bad decisions are the “best available given the circumstances”. Though also, sometimes no decision is the better option, which is difficult for a political party that wants to be seen to be doing something….
It’s very easy politically to continually jump on the bad decisions without being aware of the compromises and trade offs. Labour spent the first couple of months in office complaining about the mess the Greens left even though they were a part of the “no overall control, minority-led” council of the last few years and are now in the Finding Out phase where the demand increases that all councils have seen since 2020 are really coming home to bite.
Not even woke behaviour, Zippy. “Wokeness” is about being aware and mindful, otherwise you’d be a Tory, asleep at the wheel. No, this was fiscal incompetence by the previous council, and now this council is going to be unpopular to solve it.
The previous council kept the show on the road despite 2 years of lockdown and another year of serious labour shortages across all services. On top of that there were around £40m of real terms budget cuts and a significant drop in Council revenues due to COVID/Lockdown. The Council now spends £275m less per year in real terms than it did in 2010 – and that’s the root cause of the mess local public services are in.
You might want to look around the country at all the councils lining up to file effective bankruptcy in the next couple of years. Strangely enough, none of them are run by the Greens
That’s pretty much nail on the head, James.
Have there been some bad decisions along the way? Probably, no council is perfect, and in some councils there have been disastrous decisions (eg Thurrock). On the whole though, every council around the country is being asked to do more with less and have been for some years now.
Meanwhile the i360 is now 3 months overdue filing its accounts, and the council does nothing despite being owed nearly £50m… and nobody has been held accountable for the whole farce…yet
Don’t worry let’s build more cycle lanes that should cure it !
And what about £ millions on renovating street lights along sea front. You could’nt make it up.
Cycle lane projects are not funded by the local council, so they have no bearing on the state of the Council’s budget. They were/are funded by central government, and by deciding to delay them, Labour are risking having to pay that money back. This adminstration’s decisions to delay the building and upgrading of cycle lanes could end up costing the Council £millions.
“Man up – or girl up” are these people for real? Just say take tough decisions or balance the books etc. You’re an elected official!!!
Offficials are not elected.
And what about £ millions on renovating street lights along sea front. You could’nt make it up.
I pay £275 a month council tax and I’m not on benefits, don’t have children that go to school, don’t have a drink or drug problem, use or rely on any of the council services so I think my money going towards mking Brighton not looking like a shut hole is money well spent orherwise I may as well frisby my £275 a month out of te window and into the sea!
It’s incredibly impressive that you manage to live here and not use any of the council services. Could you tell us more about how you: dispose of your rubbish and recycling, avoid ever using any public spaces or parks, never use the roads, pavements or car parks, plan to avoid ever needing any form of adult social care in the event that something unforeseen happens to you?
BHCC has been morally bankrupt for years – lying to and deceiving residents and businesses.
Special measures please! And start by sacking managers in the overstaffed and profligate Transport and Parking department
Introduce a 1% Tourist tax Easter -September
Start charging airbnb’s a local tax, hotels and B&B’s have to pay a business rate!
When Labour first got back in in May it was a £3m black hole, then a £11m black hole, then a £25m black hole and now a £70m black hole with an extra £2.5m debt from the i360 and threats of bankruptcy.
With maths like this, we can all sleep safe in our beds at night knowing our council is in safe hands.
Criminal investigation needed and all transport projects and teams scrapped immediately.
That’s an easy fix – just flog one of the town halls. Hove town hall is no use to anyone anyway.
That’s what they’re planning. Let the Council officers hide at home from the public they are failing to serve and flog off the family silver – ie the public offices and assets.
Curious the abuse and blame calling , whilst ignoring increase of 260% Special Needs Children in five years .
Described as a regional and national issue . The priority might be to investigate the cause !
The Council should have an open forum asking residents what measures they would support that lead to cutting costs and raising revenue
One thing is for sure: it’s times like these when strong leadership and transparency are needed most. Let’s hope that Brighton and Hove City Council can navigate these challenging waters successfully and continue to serve the best interests of its residents.