Labour leader vows to repay £3 million overspend of Brighton & Hove City Council's finances

Budget-setting will have to start now for next year, councillors heard, to help cover the cost of a £3 million black hole in Brighton and Hove City Council’s finances.

In the past financial year, pressure from inflation, increased demand for council services and a higher than expected pay award for council workers resulted in an end-of-year overspend.

Labour council leader Bella Sankey said that the budget-setting process for next year would start now.

She told the council’s Strategy, Finance and City Regeneration Committee: “That overspend will need to be paid back to the working balance over the next three years which only adds to the difficulty that this administration will face in terms of balancing the books during our term in office.

“We have agreed with officers that our budget setting process for 2024-25 should start right away and we will work creatively with residents, trade unions, officers and council workers to try to find ways to close the budget gap while maintaining vital frontline services and being ambitious for our city.”

During the meeting at Hove Town Hall yesterday (Thursday 22 June), finance chief Nigel Manvell told councillors that there were two “significant areas of pressure”, with inflation adult social care and services for children and families.

He said that care placements for children and adults with learning disabilities and the home to school transport budget all faced higher costs and put the blame on inflation.

The council’s families, children and learning directorate had a £103 million budget and overspent by £2.8 million.

Mr Manvell said that difficulties for adult social care were eased through negotiations with the National Health Service (NHS) to support winter planning and mental health.

The local government pay award, set nationally, cost more than £5 million more than budgeted for in February.

The council also suffered a £1.2 million fall in parking revenues, he said. And providing for the homeless after the “everyone in” policy during the coronavirus pandemic continued to add £700,000 extra to the cost of temporary housing.

Mr Manvell said: “That does indicate there are some underlying significant pressures still within the budget and still existing.

“But when we look back at last year, inflation was particularly exceptional – and I don’t think anyone would predict that it would peak at 11.1 per cent as it did in October.

“That, too, was compounded by cost of living issues that began to rise and cause higher service demands in some areas of the council.”

When the council set the budget in February, under the Greens, councillors had to consider the “in-year” financial position, which forecast a £6.5 million overspend at the time and a £1.4 million drop in council tax revenues.

Mr Manvell said that the end-of-year overspend of £3 million was better than earlier forecasts, with spending and recruitment controls helping to reduce the amount.

The council had a working balance of £9 million, he said, which would cover the overspend although it would have to be repaid at a rate of £1.6 million a year over three years.

Mr Manvell told councillors that reserves totalling £37 million were earmarked for specific purposes while the working balance was there to cover unexpected spending.

But he said that 2022-23 – the financial year to the end of March – was the first time that Brighton and Hove City Council had used the working balance to cover its deficit.

Labour councillor Jacob Taylor asked if it was really the first “out-turn overspend”, given an overspend on services in 2019-20 when the budget ended up as balanced.

Mr Manvell said that, in previous years, some departments had had issues, but the overall budget was balanced by reallocating funds and using some reserves.

Councillor Taylor said: “It is clear that this city has faced a double whammy of a Conservative government that has continued, in a heartless way, to underfund all public services but particularly local government.

“And we’ve also had a Green Party that has made bad financial decisions whenever it’s been in office and we as a Labour administration have to deal with that circumstance.”

Green councillor Sue Shanks said that most of the opposition councillors were not on the council during last year’s budget-setting process.

She said: “I do think it is a bit unreasonable to attack something which was a minority administration – and it was agreed that would happen in terms of the working balance.”

In previous years, she said, the forecasts had indicated an overspend that had been met from reserves.

Councillor Shanks added: “This time we didn’t do that from reserves although there are reserves we could go back to in the future.”

Conservative Alistair McNair said: “Labour won the election in 2019 and there were many financial mistakes made under Labour in 2019.”

He cited a pay deal for rubbish and recycling staff, which averted a bin strike planned to coincide with Pride, adding: “I do look forward to a more frugal or more competent Labour administration now.”

Labour councillor Julie Cattell said that Cityclean, the council’s rubbish and recycling service, did not strike in 2019 when Labour was running the council.