Estimated £50million hole in council finances due to lockdown

And despite a cash injection of more than £18 million from the government, the council is plunging into the red, according to an official report.

The financial costs are due to be debated at a special meeting of the council’s Policy and Resources Committee next week.

A report to the committee said that losses were mounting at the rate of more than £10 million a month.

The report said: “This is now a common picture presented by the majority of local authorities.”

It highlighted “the challenging balancing act for the council in determining the financial support to provide now versus the current and longer-term financial impacts of the pandemic on the council and the city”.

The council was dipping into its reserves – the equivalent of a savings account – but the report said that this was “only a short-term solution”.

The report also warned: “It is not possible quantify all of the costs, losses and exceptional expenses that the authority will experience during this immediate crisis and throughout 2020-21.

“It is therefore not currently possible to say whether or not the government emergency funding streams, including any future announcements, will be sufficient to defray these financial impacts.

“Should these funds be insufficient, members are advised that the council will need to call on its

‘working balance’ and other ‘earmarked reserves’.

“The council does not hold ‘unallocated reserves’ or ‘financial smoothing reserves’ held by some authorities.”

Even the £150 million revenue from council tax bills could not be taken for granted, the report said, taking into account the prospect of people falling into hardship.

The same was true for the £59 million in business rates that the council had expected to receive in the current financial year.

The council is concerned that there may be a significant rise in the number of businesses closing or going bust.

In the current financial year the council had expected to generate £110 million in fees and charges but the report said: “All of these income and taxation sources are now very uncertain.

“Fees and charges are expected to be severely depressed by the economic situation, particularly the downturn in the important visitor economy which underpins significant incomes such as parking, museums and the Brighton Centre, and other incomes linked to economic activity, eg, planning fees.”

The fall in visitor numbers and the cancellation of conferences and major events such as the Brighton Festival, the Fringe and Pride have been estimated to have contributed to losses of almost £5 million a month.

But that figure is just the financial hit being taken by the council. The lockdown has also led to wider losses for hotels, bars and restaurants – and others in the tourism and hospitality sector, including their suppliers.

The Liberal Democrats’ party conference, which is due to take place at the Brighton Centre in October, is currently on hold.

The council report said that more cash could come from the government along with money from the Brighton and Hove Clinical Commissioning Group (CCG) to cover the extra cost of care for people discharged from hospital.

The report was prepared for the special meeting of the council’s Policy and Resources Committee which is scheduled to start at 4pm next Wednesday (27 May).