Budget cuts worth £37m needed next year, report to Brighton and Hove City Council says

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.