Brighton And Hove Council Warned Over Risk Of Failing To Set Balanced Budget

Councillors have raised concerns about the risk of Brighton and Hove City Council being unable to set a balanced budget next year, following the publication of an annual audit report.

Independent councillor Pete Atkinson said the auditors’ findings to the end of March last year highlighted the potential risk of a section 114 notice being issued.

Such a notice is triggered when a council cannot balance its budget or pay its bills, effectively freezing spending unless approved by the authority’s finance chief.

The issue was discussed at the council’s Audit, Standards and General Purposes Committee meeting on Tuesday (27 January), when members considered the audit report for 2024–25.

Auditors Grant Thornton warned that without “urgent clarity and decisive action”, the council’s 2026–27 budget faced a serious risk of leading to a section 114 notice and possible government intervention.

Cllr Atkinson said the financial pressures faced by Brighton and Hove were likely being mirrored by councils across the country.

He also raised concerns about the management of the Housing Revenue Account (HRA), which is funded by council tenants’ rents.

Conservative councillor Anne Meadows echoed those concerns, highlighting the challenge of building new homes while dealing with a significant repairs backlog identified by the social housing regulator.

When the draft 2026–27 budget was reviewed by scrutiny committees earlier this month, the council’s general fund was shown to have a £12.4 million shortfall, despite more than £12 million in proposed savings.

Rising demand and costs for temporary and emergency accommodation for homeless residents were cited as major pressures.

The council’s interim director of finance and property, John Hooton, said a section 114 notice would only be issued if the authority was unable to set a balanced budget or manage its finances during the year.

He said the auditors’ recommendations highlighted the need for a strong long-term financial plan, adding that a transformation plan developed over the past year would be presented to cabinet in February.

The future plan focuses on high-cost areas such as emergency housing and adult social care placements.

Proposed savings also include relocating council staff from Barts House in Brighton to Hove Town Hall.

Addressing the HRA, Mr Hooton said reserves stood at just over £12 million, adding that the council was mindful not to rely too heavily on those funds.

Final budget proposals are due to be published next Wednesday (4 February), ahead of a cabinet meeting on Thursday 12 February.

The full council will then meet to set the budget on Thursday 26 February.