Brighton's Council Patches £51m Hole

Brighton and Hove's budget black hole created by the response to the coronavirus pandemic has been filled for the time being, senior councillors were told on Thursday (February 11).

A £51 million deficit looked possible at the start of the first lockdown almost a year ago for Brighton and Hove City Council.

But a series of tough decisions taken early on and emergency grants from the government have helped reduce the scale of the council’s financial challenge.

Officials have also proposed making use of millions of pounds from reserves — the council’s savings — to “smooth” the budget into balance.

The council’s acting finance chief Nigel Manvell set out the picture at a virtual meeting of the council’s Policy and Resources Committee on Thursday.

The government has given the council extra grants worth £22 million — significantly more than the £10 million forecast last summer.

Mr Manvell said that a number of major or capital projects had been paused, creating an underspend of £4.8 million.

But that figure was dwarfed by the £8.5 million shortfall in council tax and business rates receipts during the Covid pandemic.

However, the government is expected to make good 75 per cent of the losses.

The huge cost of adult social care and a monthly bill of more than £500,000 for personal protective equipment (PPE) and Covid-related cleaning had contributed to a challenging financial situation.

But by December the council appeared to be at a break-even point which tipped into an underspend because of the delays to capital projects.

The cost of housing rough sleepers who were helped off the streets almost overnight had been mitigated by “Next Steps” programme funding from the government.

It would help to support hundreds of former rough sleepers into long-term housing and had saved £1 million of budgeted spending.

And the coronavirus vaccination programme has also give the council’s finances a shot in the arm.

The council was looking at a big drop in income from the Brighton Centre with concerts and conferences cancelled.

But the NHS has temporarily leased the venue as a mass vaccination centre, bringing in an unexpected £700,000 boost.

The council has also received £1.4 million more from the NHS to manage discharges from hospitals as a result of Covid-19.

Council leader Phélim Mac Cafferty told the Policy and Resources Committee that the pandemic had put more strain on public services after 10 years of austerity, leaving council services “as bleeding stumps”.

Councillor Mac Cafferty said:

“We can see the very dire consequences for local government thrust into a crisis with limited resources.”

He said that on Wednesday (10 February) Eastbourne Borough Council had sought a financial lifeline from the government because it was on the verge of bankruptcy.

And he quoted Eastbourne’s leader as saying the perilous financial position had existed before Covid.

Labour councillor Daniel Yates said that difficult decisions were made by both the previous Labour administration and current ruling Greens to help bring the council back to a stable position.

Councillor Yates said that the council would have to keep making tough decisions as much of the money patching up the budget was one-off funding.

He said:

“I don’t think we should be under any misapprehension at all that we have some long-term structural problems here in the council financially.

“Not to the same level as places like Eastbourne and East Sussex County Council, where we’ve seen slash and burn approaches, and of desperate handouts being given to keep them afloat.

“We do need to recognise a lot of the money that’s come in is one-off money.

"It’s short-term money. It’s not long-term solutions.”

Conservative councillor Joe Miller said that there is a lot to thank the government for, adding:

“It’s to be noted and gratefully received that the government has provided £22.166 million to date, just to the city council, let alone to businesses, unemployed people, self-employed people and people on furlough.

“We have a huge amount to thank the government for — and the taxpayer ultimately who is bearing the brunt of this crisis.”