Brighton and Hove City Council has put in place a series of emergency measures aimed at balancing the books by the end of the financial year.
They include a hiring freeze, an overtime ban and a stop to using agency workers. Staff have also been invited to take unpaid leave or switch to part-time hours.
Strict spending limits have been imposed and some non-urgent and non-essential repairs and other routine tasks are being put back until the new financial year starts in April.
The measures were imposed after it emerged that the “forecast out-turn risk” could be about £8 million – that is, the council could end the year having spent about £8 million too much.
The budget gap has been closing, as usual, during the current financial year as overspending risks were reduced – until a request for help from the Royal Pavilion and Museums Trust.
The council set up the trust more than four years ago and by last summer it had borrowed £5 million from the council, with income having been dented during and after the coronavirus pandemic
It is understood to have borrowed a further £1 million before Christmas – as it is contractually entitled to do – but this has dented the council’s own finances. And the loan request appears to have been unexpected.
It comes as the council has greater certainty over the borrowing liabilities resulting from the financial collapse of the Brighton i360 seafront viewing tower.
Senior officials have been asked to look afresh at where savings can be made as measures like the jobs freeze were imposed.
Exceptions have to be signed off by the chief executive Jess Gibbons and can be made in certain circumstances, for example, to fulfil a statutory duty or on health and safety grounds.
Some posts are required to meet contractual terms and others enable the council either to generate income or savings – so it would be more expensive to leave them unfilled.
It has been acknowledged that the pause for all non-essential spending may just end up pushing some costs into the next financial year but the move does buy time.
The council is also looking at “reprofiling” project timescales and borrowing – perhaps pushing back start dates or stage payment dates.
The deputy leader of the council Jacob Taylor said: “The in-year financial position continues to be difficult so we’re taking decisive action to bring spending under control.”
Councillor Taylor added: “I realise this is difficult for staff and will put pressure on services but I know residents will understand the need for the council to not overspend this year.”
The updated financial position is due to be published this week as the council’s cabinet prepares to meet next week – on Thursday 23 January.
Initially, councillors were told that the council was facing a £36 million budget gap in the next financial year – 2025-26 – which starts in April.
But after the Labour government’s budget, this looked like reducing to £30 million – and various announcements since could reduce the gap further although more savings will still have to be found.
The savings tend to come from measures such as making staff redundant or providing fewer services or lower-quality services – while fees and charges go up.
The service areas where the council spends the most remain adult social care, children’s services and supporting homeless people.
The council looks likely to receive about £1 million more than expected to tackle homelessness and the council is reviewing its own property portfolio to see if it can be used more creatively.
This month, the council is expected to publish its draft budget for 2025-26 and confidence is growing that a balanced budget will go before all 54 councillors for approval next month.
It looks likely that the council tax will once again go up by 4.99 per cent and, with the highest number of new homes completed for years, the council tax base is expected to be bigger.
But a growing number of people have been struggling to pay their council tax bills and this may have to be factored into the council’s budget projections
Another challenge has emerged since the budget when employers’ national insurance contributions went up. Councils were told that they wouldn’t be worse off but not everyone believes that to be the case.
Like many other councils, Brighton and Hove City Council also relies on a huge number of private sector businesses to provide goods and services and their costs are rising as a result of higher national insurance.
Many of them will want to recover their increased costs in the amounts that they charge the council.
The financial picture should become clearer in the coming days and weeks but it seems unlikely that the current hiring freeze, overtime ban and spending restrictions will be ended any time soon.