The rising cost of living and increased demand for council services mean that there is an estimated £37 million black hole in next year’s budget, according to a newly published report.
The report to Brighton and Hove City Council’s cabinet said that the budget gap could be as much as £105 million for the next four years.
The forecasts are based on council tax going up by 2.99 per cent a year, with 2 per cent extra each year for adult social care.
The biggest challenges are being faced by the council’s “demand-led” services – those catering for vulnerable adults, families and children such as social care and homelessness support.
The council may have to consider reducing or closing “non-priority” services during the budget-setting process for 2025-26 and beyond.
The report said: “When combined with the previous government’s grant reductions and restrictions on the allowable level of council tax increases, these demand-led cost pressures have been the main driver of the substantial ‘budget gaps’ that the council has been experiencing for over a decade.
“In summary, the system of local government finance has failed to keep up with growing demands and costs.”
The most expensive high-pressure areas are
- general inflation and assumed pay awards – £9.8 million
- adult social care – £9 million
- special educational needs and social, emotional and mental health needs – £3 million
- capital financing – £5 million
- other pressures – £7 million
Since the general election in July, the new government has ruled out council tax reform and no changes are planned for social care funding.
The report said: “In almost any scenario, local government will continue to face very significant financial challenges and will need to look to support from central government in the form of additional funding and/or additional financial flexibilities, particularly in respect of local taxation.
“The Local Government Association’s White Paper reported a projected national funding gap of £2.3 billion in 2025-26, growing to £3.9 billion in 2026-27 for the sector.”
During the budget-setting process, the council will look at how to deal with demand-led budgets such as social care.
The £211 million capital programme will also be reviewed, along with savings in in-year spending and a review of the council tax and business rates tax base.
Currently, the council has a working balance of £6.7 million after £3.3 million was taken to deal with the 2022-23 overspend.
This sum is being paid back at a rate of £1.125 million a year for three years to bring the balance up to 4 per cent of the £269 million general fund budget.
There are also earmarked reserves of £31 million, much of which is held for contractual commitments and regeneration projects.
Much of the council’s total £1.1 billion budget is “ringfenced” and can only be spent according to government grant conditions or other legal regulations.
These include schools and special educational needs services through the £232 million Dedicated Schools Grant, housing benefits, public health services and the Housing Revenue Account made up of council tenants’ rents.
All other unringfenced funding is used to provide the majority of council services and is referred to as the “general fund” .
Consultation on next year’s budget with businesses, schools and the community and voluntary sector will take place during the winter before the “budget council” meeting, scheduled for Thursday 27 February.
The report to cabinet said that the council hoped to use the “Your Voice” section of its website to understand residents’ priorities.
A public event is also proposed to explain the restrictions faced by the council when setting the budget and the difference between capital and revenue spending, the latter paying for day-to-day services.
The Cabinet is due to meet at Hove Town Hall at 2pm on Thursday 26 September. The meeting is scheduled to be webcast on the council’s website.
But I thought the Labour said the council deficit was down to the Greens. Strange how the budget gap has increased on their watch. It’s like austerity was the problem all along, and either the finance guy Jacob Taylor wasn’t clever enough to realise this, or just petty enough to play ridiculous political games and point the finger elsewhere. This kind of politics stinks.
Assume this Labour government will step up and make sure Brighton council don’t have to make dreadful cuts to public services.
How much is being payed to support the i360?
While the council grapples with a £37m budget shortfall, I believe cutting support workers and the associated support network around mental health and substance abuse users could help address the financial strain. From my own experience, these services often create a cycle of dependency and inefficiency. Highly trained professionals or those with more intellectual and specialised knowledge could offer more effective support to vulnerable individuals, rather than the current, expensive and sometimes ineffective system. Streamlining these services could free up resources for areas that truly need it
I don’t think much is being spent to actually support the i360, I think the issue there is that the i360 are supposed to be repaying the loan, and to date they haven’t done that, they’ve just made payments towards the interest. The worry with the i360 is that the debt is there and it would be a problem if it were to fail as a project completely.
So it is important the council acts responsibly and does what it can to support / encourage / promote the i360 – as the debt would be a problem if it were to fail. Obviously the i360 should really be making interest and capital repayments, and over time the risk to the council would decrease if this happens. In the meantime though, it’s more that the council is not receiving all the money it anticipated it would at the outset, rather than spending significant sums propping it up – although I imagine that (like with most things) there will be some costs.
Think the council probably are paying more in longstanding PFI contracts they took out years ago, like the Veolia one for waste and the library – would be interesting to know costs of those.
I’m not saying I’m a big fan of the i360, just think it’s a very tangible thing politicians have politicised and can (literally) point to, when there’s loads of wastage and expense elsewhere.
However, for the first time in years, we now have a stable and elected central government which will enable the uk and local economy to grow healthily at last…no more lettuce chaos!
Measure this government on results, not by their words.
VG3 needs to be cancelled. Consultants have told BHCC, it has no tangible benefit and will lead to increased congestion. It will also cost us local taxpayers 7million quid. BHCC is acting against residents and businesses if it continues with this folly.
Overspend on VG3 ? (The extra bcc is funding not the ring fenced government budget)
Isn’t £37m what a previous Labour administration borrowed for the i360 – a private enterprise – yet they borrowed money from the Public Loans Board??? Time to prosecute Jason KitKat and liquidate this liability before it can cost our city a penny more.
Barry, we know you hate Labour, but it was a Green/Conservative vote alliance that agreed the loan for the i360.
The Labour group voted against the loan once it was revealed that the projected visitor numbers didn’t stack up.
And we now know those visitor projections didn’t stack up and were never realistic.
Jason KitKat was off course the Green leader of that council.
You could in theory call in the i360 loan, but that would set up an even bigger problem, so hence the financial stalemate.
I’m guessing the i360 annual costs are hidden in this article here under the ‘capital financing’ figure.
It is more complicated than that though isn’t it – it was Labour who pushed the project at the outset – we all now they like to deflect any responsibility for decisions and projects they have championed if they don’t pan out, but the i360 would not have been built if at some point the project was not supported by Tories, Greens AND Labour. That is fact whichever way it’s spun – cross party decisions made over many years resulted in the i360 being built.
To quote background online: “Planning permission was granted in 2006, with the then Labour Party Leader of the council, Simon Burgess, stating that “It is going to transform the city. The i360 will be a familiar picture postcard image – recognisable throughout the world. It will generate huge amounts of cash and benefit the city’s economy all year round.”[6].”
Well you can try and rewrite history if you wish but the process was as follows, carried on over several years:
All councils wanted a solution to the West Pier issue.
The rebuilding of the West Pier fell through after that last fire, in 2003, and lottery money that had been promised in 1998 was withdrawn.
The West Pier Trust soldiered on, suggesting the pier might still be rebuilt, but most money left was soon eaten up in their own administration costs. A new solution had to be found, and that was thought to be a new visitor attraction, built on the promenade end of the site.
The i360 went through several development stages as a land based alternative to the west pier, and yes, it was supported by all parties initially. The i360 viewing tower initially seemed a great idea, not least because these were the same people who had created the London Eye.
But then it became clear that private funding was not forthcoming for the 1360, and it was then suggested that the council could borrow money at a cheap rate to get the thing built.
But when the projected visitor figures were looked at they didn’t stack up, and that’s when Labour turned against the project, pointing to it as no investment at all and a poor use of the land.
The Greens then combined with the Conservative councillors to outvote the Labour group.
And that’s one reason why we have the financial mess today, with the interest going unpaid on that i360 loan.
Not trying to rewrite history at all – simply pointing out that when it comes to the history of the i360, it was cross party decision making, which includes decisions made by Labour councillors at various points between 2006-present that has impacted on the position in the here and now. Am not saying Greens didn’t play a part, or Tories, but anyone denying that decisions taken by Labour at various points wouldn’t have made any difference to the project progressing, is trying to re-write history.
You can’t rewrite the fact that Labour pursued the project in 2006, that Labour councillors voted unanimously in 2006 to grant it planning permission, or that in 2016 Lab Leader Warren Morgan was toasting what a good thing it was for the city at the VIP launch. That would be like pretending Labour councillors haven’t had a very cosy relationship with GMB in the past when the KC report made clear that there were “close links” and “highly confidential information” may have been passed between the administration and GMB reps within the Council 😉
Either way – the current black hole in the council’s budget is separate to the i360 – it would be mischief making (and irresponsible) if councillors suggested it otherwise.
Oh please, Labour had there hands all over the i360 and have only turned there backs when the money wasn’t coming in.
They now shameless run it down and use it as a beating stick even during administration when they should be championing it. What is it Labour like to say ‘Country (city in this case) over party’.
No doubt they are already planning a 2027 election strategy over it, god knows they have nothing to boast about so far!
I must have written so much that ‘Preston Parker’ must have struggled to read it.
The main point was that successive councils did indeed all want a solution to the West Pier problem, but, when it came down to the i360 finances, Labour voted against the loan which is currently being defaulted on.
The Greens and Tories voted it through purely because they knew it was a vote they could win against Labour, and it is that petty spitefulness and short term thinking that got us in this current financial situation.
It wasn’t just solving the “West Pier problem” that Labour were supportive of, it was specifically the i360 project. It might be long forgotten by lots of people but an old law had to be overturned by the Department of Transport (then a Labour government) to allow the i360 project to go-head. Commenting on the i360 project (not any other different project for the site) the Labour Leader at BHCC said at the time he had been worried the developers would have walked away from the project if the Department for Transport didn’t reach the decision they did about amending historic legislation. He is quoted as saying “This has been the one thing holding this development up and making us nervous. It will be so nice to see one of these dramatic developments to really get going. They could have taken it anywhere. The risk was them contemplating building somewhere else.”
Like I said, you can try and erase Labour’s role in it all if you like, but the facts are there. I’ve not said anything about the Greens or Tories not having a role – I’m not defending anything. Just find it quite incredible the way there’s such denial Labour had anything to do with the i360 (the i360 specifically – not just solving the “West pier problem” as you put it”), when their fingerprints are all over it.
Like Mark Twain said “Denial ain’t just a river in Egypt” 🙂
I can see I need to re-write my point in just one sentence:
On topic, despite initially supporting the i360 project, Labour voted against the i360 loan once it was revealed that the claimed visitor figures did not stack up, and it is that loan, voted for by the Greens and Tories, that is causing part of today’s council debt.
🥱🥱🥱
Never let a multibillion pound hole in your finances stop you from continuing to cripple a town’s transport infrastructure. Just fine the prols more!
Kier Starmer (probably).
Perhaps they should stop wasting £10m per year on vanity projects with no defined benefits to address the climate crisis?
And I wonder how much are they allocating to gender identity politics?
When you put stupid people in jobs running the city. this is what you get
I culdn’t agree more!
This administration has chosen to spend over £6 million of local taxpayers money on VG3. It could have been redesigned in order to cut costs but now is 600% dearer for the local taxpayer than the original predicted £1 million spend. Even more laughable is that council commissioned analysis says it will make congestion worse. What a waste of money. This is Labours folly.
Don’t forget the clowns in the Transport Dept who are pushing this through in the name of ‘sustainable transport’.
Perhaps Mark Prior could be engaged to comment to reassure residents what a success VG3 will be?
Well start at the top. The salary paid to Jess ‘Funky’ Gibbon is extraordinary. At £190,000 + pension options for a 37.5 hour week, she earns more than the Prime Minister
On this Preston parker I actually agree for a change.
We need a clearer way to differentiate between you two.
Don’t bother going into Brighton, it’s a cesspit. Spend your money elsewhere.
Like most forecasts of this nature, I assume if nothing more is done to course correct. Adult social care is a big one that’s already being looked at. There’s a lot of commissioned work that duplicates and would likely perform better value for money if it was held in-house.