Coronavirus lockdown blows £50m hole in Brighton and Hove City Council’s finances

The coronavirus lockdown has blown an estimated £50 million hole in Brighton and Hove City Council’s finances.

And despite a cash injection of more than £18 million from the government, the council is plunging into the red, according to an official report.

The financial costs are due to be debated at a special meeting of the council’s Policy and Resources Committee next week.

A report to the committee said that losses were mounting at the rate of more than £10 million a month.

The Spearhead

The report said: “This is now a common picture presented by the majority of local authorities.”

It highlighted “the challenging balancing act for the council in determining the financial support to provide now versus the current and longer-term financial impacts of the pandemic on the council and the city”.

The council was dipping into its reserves – the equivalent of a savings account – but the report said that this was “only a short-term solution”.

The report also warned: “It is not possible quantify all of the costs, losses and exceptional expenses that the authority will experience during this immediate crisis and throughout 2020-21.

“It is therefore not currently possible to say whether or not the government emergency funding streams, including any future announcements, will be sufficient to defray these financial impacts.

“Should these funds be insufficient, members are advised that the council will need to call on its ‘working balance’ and other ‘earmarked reserves’.

“The council does not hold ‘unallocated reserves’ or ‘financial smoothing reserves’ held by some authorities.”

Even the £150 million revenue from council tax bills could not be taken for granted, the report said, taking into account the prospect of people falling into hardship.

The same was true for the £59 million in business rates that the council had expected to receive in the current financial year.

The council is concerned that there may be a significant rise in the number of businesses closing or going bust.

In the current financial year the council had expected to generate £110 million in fees and charges but the report said: “All of these income and taxation sources are now very uncertain.

“Fees and charges are expected to be severely depressed by the economic situation, particularly the downturn in the important visitor economy which underpins significant incomes such as parking, museums and the Brighton Centre, and other incomes linked to economic activity, eg, planning fees.”

The fall in visitor numbers and the cancellation of conferences and major events such as the Brighton Festival, the Fringe and Pride have been estimated to have contributed to losses of almost £5 million a month.

But that figure is just the financial hit being taken by the council. The lockdown has also led to wider losses for hotels, bars and restaurants – and others in the tourism and hospitality sector, including their suppliers.

The Liberal Democrats’ party conference, which is due to take place at the Brighton Centre in October, is currently on hold.

The council report said that more cash could come from the government along with money from the Brighton and Hove Clinical Commissioning Group (CCG) to cover the extra cost of care for people discharged from hospital.

The report was prepared for the special meeting of the council’s Policy and Resources Committee which is scheduled to start at 4pm next Wednesday (27 May).

The meeting is expected to be a “virtual” meeting and is due to be webcast on the council’s website here.

  1. Christopher Hawtree Reply

    My worry – amidst all this – is that it will be used to close down Hove Library, at the very time when people need the sustenance offered by books. It has gone ominously quiet on the Libraries Plan front here – something whose Consultation was curtailed by the “lockdown”. Of course other people have their concerns but I highlight this one, to which I have given so much time here. We need a national body for Libraries.

    • Peter Challis Reply

      I’m sorry, but at times when there are financial issues, everyone have to focus on “essentials”, rather than optional services such as libraries.

      What can libraries do to reduce costs rather then expecting them to be “rigng fenced”?

      Has anyone worked out how much it costs for each book borrowed from the city libraries and compared it to, perhaps, providing them by post from Amazon, or using downloadable eBooks?

      Perhaps it is time to revisit merging Carnegie with Hove Museum.

  2. Valerie Reply

    Over the years some politicians have attacked the retention of a Reserve when so much if front line provisiin was in deficit, cut, going begging.

    The pandemic is teaching us a lesson about debt, spending, ‘just in time’ market practices and the importance of savings and a Reserve.

  3. Rolivan Reply

    Add to that the i360 debt and it will take the real figure over £100m.By the way what happened to tge £10m that was left over from the sale of Kings House and the cost ‘modernising’Hove Town Hall?

  4. Peter Challis Reply

    So the council will have to make changes to balance the budget rather than expecting government to bail them out.

    Perhaps if the council started avoiding unnecessary expenditure on optional projects such as cycle lanes and manual weed removal, and looked at reducing financial support for public transport by reducing options such as hours for concessions (as is being done by TfL).

    As many commercial businesses are looking at making redundancies perhaps, unfortunately, the council will have to do the same – maybe starting with some of the senior management.

    Can we get rid of the 8 union officials that the council funds? Can we stop this plan to make the city “carbon neutral by 2030” and follow the UK’s plan to do it by 2050?

    Perhaps the council should look at what they can do to increase revenues by encouraging more businesses, lucrative visitors, and residents to come to the city rather than, seemingly, wanting to encourage them to go elsewhere?

  5. Alan Rogers Reply

    If they have the cash to halve the width of a road and make ” temporarycycle lanes” that I have yet to see a bike in wd must be ok.

    And if your running short get the I-sore to pay what it owes or are they now blaming Brexit Covid Weather for the rediculas figures they based thd theft of tax payers money on

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