A crucial budget with critical decisions to make

The first look at funding for over 700 city services, as well as funding for key projects in Brighton & Hove took place on Thursday 2 December, when draft 2022-2023 budget proposals were presented to city councillors.

The council’s budget for 2021-2022 was £825.6 million, but with cuts of £18.5 million needed to ensure the council remains on a strong footing for the next financial year, there will be difficult decisions to make. 

Speaking about the council’s spending priorities ahead of the budget, Councillor Phélim Mac Cafferty, leader of the council, said: “Fairness and sustainability are values that run through everything we do, underpinning our priorities and forming the basis of the decisions we will make.

"The council has a vision of achieving a fairer city and a sustainable future, supported by ambitious programmes such as a Carbon Neutral 2030 programme, and committed, hardworking staff.

“We’re proud to be a City of Sanctuary, with a rich culture and heritage, stunning natural environment, proud communities, strong academic offer and a solid economy despite everything that’s been thrown at it over the last few years. This puts the city in a very strong position.  

“But we know the council has a vital job to do in order to support residents, visitors, communities and businesses through the many complex and difficult challenges the city faces including the ongoing Covid-19 pandemic, the national housing crisis, caring for the most vulnerable with an ageing population, and responding to the climate and biodiversity emergency.” 

"Council staff have gone above and beyond"

Councillor Hannah Clare, co-deputy leader of the council, added: “Over the last couple of years, council staff have gone above and beyond responding to a global pandemic by pulling together to continue providing the services the city needs in critical circumstances.

"We’re looking at improving the pay of our lowest paid employees, staying true to our commitment to be a living wage employer and reducing the gap between the highest and lowest paid staff. 

“With that being said, we face an enormous challenge when it comes to how we fund all the current programmes, projects, work and initiatives that we want to see continued into the future for the city we all love and care about.

"Reductions by central government over the last 11 years have seen our annual funding reduced by over £100 million, on top of the huge pressures created by the pandemic and rising costs, demand for council services is outstripping the resources we have available. 

“We need to start talking now about the difficult decisions we need to take, to make sure we are spending the council’s money on the services which are needed most and are most important to the city. 

“As we don’t have the resources to do everything we want to do, change is needed and we will have to prioritise the most important services for our most vulnerable residents, while investing in our vision of a fairer city and a sustainable future for Brighton & Hove.” 

Our financial position 

Recently, our focus has been on managing the financial impact of the pandemic and, although the number of people with Covid or having to go to hospital due to Covid is lower than this time last year, its effects are still a reality for public services, our residents and our local businesses.

There is also a backlog of demand and need, owing to the impact of services closing down during lockdowns last year.  

The impacts of the pandemic continue to place financial pressures on council resources this year, particularly around, ongoing emergency homelessness provision, and pressures on social care provider costs.

Although the expectation is that these situations will improve significantly next year, it is still expected that the council will have to find approximately £2.5m to cover Covid related costs in 2022/23. Much of the funding provided by central government to help mitigate the cost impact of the pandemic is due to end. 

It was announced earlier this year by central government that there was to be a significant increase to funding for local councils, but unfortunately this increase won’t be enough to cover the increased costs of services including rising inflation and increased demand pressures of over £20 million for 2022/23. 

The report taken to the council’s Policy & Resources Committee highlighted that, taking into account the announcements from central government earlier this year and taxation increases, £18 million is still needed to be cut from our 2022/23 budget.  

Paying for council services in 2022/2023 

Speaking about how council services are funded and what options there are, Councillor Tom Druitt, joint lead member for finance, said: “Around 40 per cent of our budget comes from specific government grants which are restricted by law to spend on schools housing benefit payments, and public health.

"Around 17 per cent comes from fees and charges, 19 per cent from council tax, 8 per cent from retained business rates and 10 percent from government grants.

"The remaining 6 per cent relates to housing rents which may only be used to manage and maintain Council Housing Stock. 

“With the rising cost of providing services and increased demand for them, the council is stuck between a rock and a hard place.

"Central government funding will not cover the gap and so the only options left will be through increases in Council Tax, fees and charges, growth in business rates or further cuts to services, which we are working very hard to avoid.” 

What we’re doing 

To try to mitigate some of the funding shortfall in the budget, potential options have been identified for around £8.5m of savings. This includes: 

  • reviewing existing contracts for outsourced services to ensure best value 
  • looking at the best way to support people’s increasingly complex needs, working closely with our NHS partners and others 
  • exploring how to increase our revenue and how we can provide services in a different way 

Now that we have more details of the government’s three-year Spending Review announcement, we will be looking further ahead. We will adopt a four-year budget plan, but the current outlook suggests that there could be budget shortfalls of over £27 million over the period, including the shortfall in 2022/23. 

To ensure that our most vulnerable residents will still get the support they need, we’re proposing to: 

  • increase support provided by the Council Tax reduction scheme to offer a bigger discount, and make the scheme simpler 
  • lead the way by raising the salaries of our lowest paid workers above the Real Living Wage and encouraging other businesses in the city to follow suit, to help account for the rising cost of living; 
  • increase investment in Adult and Children’s Social Care by over £10m to make sure we provide for children and adults needing support, care and protection 

What happens next 

Thursday’s meeting is the first discussion around the budget. Talking about the journey to get to a final decision about the budget, Councillor David Gibson, joint lead Member for finance said: 

“This is the first step in the budget process and these proposals will not only evolve, but further proposals will also need to be developed before the whole budget package is presented to all 54 councillors on Thursday 24 February.  

“The months ahead will involve officers working with councillors to explore more ways to close the budget gap, while funding the essential services the city needs. 

“We are facing a difficult year, as are many other councils across the country, but we are confident we can continue to balance the budget by taking the difficult decisions we need and progressing the council’s vision of a fairer city and a sustainable future.” 

Key dates 

  • Thursday 2 December: Initial report goes to Policy & Resources Committee 
  • Thursday 20 January: Council agrees the tax base calculations for 2022/23 
  • Thursday 10 February: Final budget proposals to Policy & Resources Committee for recommendation to Budget Council 
  • Thursday 24 February: Budget Council 

Find out more about where council funding comes from and how the money is spent.