Brighton and Hove City Council faces a forecasted overspend for 2023/24 that is “of sufficient magnitude to be potentially destabilising to the authority’s financial sustainability if it is not managed down”.
That’s according to comments from chief finance officer Jeff Coates in a targeted budget management report recently presented to the council’s Strategy, Finance & City Regeneration Committee.
“Escalated” financial controls have been put in place in an attempt to contain the situation, with recruitment and spending impacted.
According to the report, Brighton and Hove’s forecast risk for 2023/24 is an £11.101m overspend on the general fund revenue budget. This includes a forecast overspend of £4.823m on the council’s share of the NHS managed Section 75 services, the report said.
The report shows that a significant level of savings are also at risk: £2.947m (23%) of the savings package in 2023/24 of £13.043m.
“The position is not dissimilar to 2022/23 where very high inflation led to significant pressures. Both demand and inflation are not subsiding in many areas and in some areas continue to grow at unprecedented rates, for example, home-to-school transport,” said Coates in the report.
“The forecast overspend is of sufficient magnitude to be potentially destabilising to the authority’s financial sustainability if it is not managed down and would impact on the working balance and reserves. Services will continue to develop financial recovery plans as required by the [targeted budget management] framework, but escalated corporate recruitment and spending controls are also required in this situation and have therefore been applied with effect from 3 July until further notice.”
The controls will be managed by directorate management teams (DMTs) with oversight from the executive leadership team (ELT) and members, via future targeted budget management reports.
The financial controls include a minimum 8-week automatic delay to all permanent, temporary, interim, agency or casual recruitments unless overridden by exception by the relevant DMT, while DMT approval will be needed for any contract extensions.
The council will also aim to implement “alternative recovery or mitigation measures to address any forecast underachievement of approved savings”. Additionally, underspending opportunities will be identified. “DMTs will review underspending or break-even services to explore whether greater underspending or moving into underspend can be achieved to assist the position,” Coates said in the report.
Financial transaction limits will be imposed, above which senior management approval will be required. Similarly, a review will be required for any local schemes of delegation to managers for spending decisions, for example, authorisation of adult or children’s social care packages, and considering whether or not to review the delegations, the report added.
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A moratorium or limit will be imposed on certain types of non-critical expenditure where possible, the report said, while target reductions for certain types or categories of expenditure will be set where this can be done without destabilising service delivery.
Alternative funding such as bids for grants, income generation, and invest-to-save business cases will be explored in a bid to relieve pressure on the revenue budget.
Capital schemes may also be “paused or curtailed” – particularly those that are supported by borrowing, Coates said. “The council’s capital programme will be reviewed as part of the budget setting process for next year but some schemes could immediately be paused,” he said. “This may require committee approvals which will be advised by the chief finance officer and monitoring officer as appropriate.”
The controls will remain in place until the forecast position improves, Coates said.
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