An emergency budget may be on the cards as increased spending and lost income because of the covid-19 coronavirus crisis has left a £49 million hole in the council’s finances.
The pandemic was directly responsible for almost £38 million in extra spending and lost income, finance chief Nigel Manvell told Brighton and Hove City Council’s Policy and Resources Committee.
Mr Manvell said that the council was working on the assumption that, even with some level of recovery and government support, it would still need to make up £23 million for this year’s budget.
Increased pressure on adult social care services had resulted in a £13.5 million overspend, he told the committee during a “virtual” meeting last night (Thursday 9 July).
And lost income from parking and events had cost the council almost £26 million, he said.
The council had also added £4.2 million to the budget for personal protective equipment (PPE).
Mr Manvell presented councillors with three scenarios – optimistic, moderate and worst case – requiring one-off funding of between £17 million and £39 million.
To save money, the council was pausing capital projects. These would be reviewed in October.
Labour councillor Daniel Yates said that it was essential to see the scale of the “collection fund” deficit – the shortfall in council tax payments – because this was an issue that the council would have to deal with in the autumn.
He said: “We don’t even yet know what the scale of the challenge we are going to have to address is. Probably by October, we will be in a better position.
“At the moment we are still pulling figures together – awaiting announcements. We have seen announcements today that could in effect change some of those predictions.”
Councillor Yates said that reopening swimming pools and gyms would improve matters, as would businesses reopening.
He said that the council would need to carry out a “significant” amount of action and may need to come up with an emergency budget when the bigger picture became clearer after the Chancellor’s autumn statement.
Councillor Yates also said that the options, such as an emergency budget, would affect people because they would inevitably involve things like cutting services or putting up council tax.
He said: “I’m not suggesting these are possible but that these are the things on the table.”
Councillor Yates added: “We need to understand the depth of the hole that we’re in, to stop digging the hole and to work out if anyone is coming to help us out of the hole before we get to October when we decide how do we get from the bottom to the top.
“That’s what we need to do. This is not about party politics. It is about sensible management of the city and its finances.”
The committee agreed to follow the “moderate” set of predictions, planning for predicted budget shortfalls for the next two years, and repaying those shortfalls out of reserves – or savings – over 10 years.
The executive leadership team would prepare a possible emergency budget.
Although capital spending is on hold, councillors unanimously agreed to a proposal by Conservatives Joe Miller and Steve Bell to continue to explore how commercial properties could support Madeira Terraces.
Councillor Bell, the Conservative leader, said: “There are a lot of eyes in the city on the Madeira Terraces.
“I know, cross-party, we agreed what we wanted to do in the budget. This is just an extension of that.”
They also agreed to Green proposals put forward by the opposition group’s convenor Phélim Mac Cafferty and Councillor David Gibson to explore how the Sustainability and Carbon Reduction Investment Fund capital programme could continue in October.
Councillor Mac Cafferty said: “There is loads of evidence at the moment that we really can plan a green recovery, a health recovery, for our city and indeed the sub-region.
“Not only can we recover well by doing things like retrofitting for warmer homes, we can recover in a way where we prioritise well-paid and skilled jobs.”