The council is on track to overspend its budget by £11.6 million in the current financial year, according to a newly published forecast.
This amounts to more than 5 per cent of the “general fund revenue budget” – which was set at £200 million for the 2022-23 financial year from last April to the end of next March.
The reasons include more children in complex care placements, a drop in parking income and a failure to make the savings that were approved when councillors set the budget in February.
Brighton and Hove City Council voted through savings totalling £10.5 million for 2022-23 but a report to councillors said that £5.4 million of those proposed savings were “at risk”.
Rising costs were blamed for almost £4 million of the savings shortfall, according to the report, while savings of just over £5 million had been achieved.
The report to the council’s Policy and Resources Committee said that the projected overspend was “significant” after cuts totalling £10.5 million last year and 11 years of “savings packages” totalling more than £185 million.
When councillors discussed the state of the finances last month, officials announced a recruitment freeze.
At the meeting in October, councillors agreed to look more closely at spending cuts and possibly putting up fees and charges while pausing some projects which were under way or planned.
The latest report said: “There are also impacts relating to the cost of living situation and economic conditions which are currently suppressing key income sources such as planning fees, parking permits and commercial rents as well as continuing to drive higher council tax reduction claimant numbers and homelessness.
“The forecast presents a serious financial risk and, if not managed significantly, will severely impact the level of the council’s reserves and balances which would need to be utilised to fund any overspend.”
The figures for the first seven months of this financial year – to the end of October – are better than those to the end of August. The previous forecast was an overspend of more than £13 million.
But parking charges and permits have not brought in as much money as expected this year, with permit income falling short by almost £700,000 as fewer people paid up when prices rose.
At the same time, the income from parking charges is falling short by more than £600,000, some of which reflects a loss of parking spaces as a result of “active travel” schemes.
The report to the Policy and Resources Committee projected a year-end revenue shortfall of more than £3.2 million for permits and on-street and off-street parking charges.
At Cityclean, the council’s rubbish and recycling service, the cost of agency staff helped fuel an “overspend of £558,000 … due to vacancies across the service”.
The report said: “Recruitment into vacant posts and managing of attendance should start to see these high agency costs reduce during the year.”
The stink over the closure of public toilets also re-emerged, with the report setting out an overspend of £137,000 “due to greater than budgeted utility costs, consumables and staffing required to maintain cleaning levels”.
In children’s services, home to school transport is forecast to overspend by more than £1.2 million while the projected overspend for children’s placement is more than £1.5 million.
The report said: “There are significant overspends in residential home and semi-Independent placements due to increasing difficulty in finding suitable foster carers.”
The number of children in care has risen 9 per cent since 2020 – and more children in care have more complex needs, resulting in expensive placements costing an average of almost £13,500 a week.
The report said: “The post-pandemic period has seen children with increasingly complex needs as well as problems in foster care recruitment causing an acute sufficiency issue, making placing children in families either in-house or with external providers is very difficult.
“This has inevitably led to increasing numbers of children placed in residential homes or costly semi-independent placements.”
A special school, Homewood College, is due to become an academy and the council will have to meet the cost of the school’s budget deficit, expected to be about £250,000.
And the council’s “Housing Revenue Account” – funded from tenants’ rents – is also forecast to be overspent by more than £1 million.
The financial outlook and measures to improve it are expected to be discussed by the council’s Policy and Resources Committee on Thursday (1 December).
The committee is due to meet at 4pm at Hove Town Hall – and the meeting is scheduled to be webcast on the council’s website.