A hiring freeze coupled with tougher than usual spending controls have helped to reduce the council’s forecast overspend for the current financial year.
Brighton and Hove City Council finance officials forecast an overspend of about £11 million two months ago.
But an updated report to the council’s Strategy, Finance and City Regeneration Committee included a downward revision, with the forecast overspend now totalling £8.9 million.
The report said that a recruitment freeze and spending controls had been in place for the past two months and might have to be continued and even escalated.
The council’s income has dipped, with lower than expected revenue from planning fees and commercial rents. In addition, more people are claiming a reduction in their council tax.
Demand-led budgets such as home to school transport, with a projected £500,000 overspend, are also putting pressure on the council’s finances.
According to the report, more children need to travel alone, more over 16s are using the service and the lack of local special school places have all added to those pressures.
Increased running costs and a shortage of drivers and escorts for children with special educational needs and disabilities (SEND) have also fuelled rising costs.
The report included a forecast overspend of £1.8 million on community care – and the council was also expecting a £1.8 million overspend on temporary housing.
These are all statutory services that the council must provide.
The spending update is due to be discussed by senior councillors less than a fortnight after a stark warning from the council’s external auditor Grant Thornton.
The auditor told a meeting of the council’s Audit and Standards Committee that the council’s financial sustainability was a “significant weakness” at a meeting on Tuesday (26 September).
Grant Thornton director Darren Wells told the committee that the council was at “a tipping point and the position is as bad as I think it can be”.
Councillors were advised to act now to ensure that Brighton and Hove does not end up bankrupt like Birmingham, Slough and other councils across the country.
A report to councillors said: “The budget process for 2024-25 aims to take a different approach and to take a more fundamental look at the council’s cost base and the affordability of services and capital investments in the context of statutory responsibilities.
“The council’s reserves and working balance are low relative to most authorities and therefore not addressing the in-year overspend and the underlying cost base may lead to a position where it does not have sufficient resources to balance its budget, particularly given a very large predicted budget gap of £25.3 million next year.”
Planned savings of £14 million were programmed for the current 2023-24 financial year when councillors voted on the annual budget in February.
But forecasts suggest that £4 million of these savings may not be achieved this year.
The council’s Strategy, Finance and City Regeneration Committee is due to meet at Hove Town Hall from 4pm on Thursday (5 October). The meeting is scheduled to be webcast on the council’s website.