Bristol City Council could face a funding shortfall of up to £87.6million within five years, cabinet papers reveal. The authority announced last Tuesday (September 27) that it needed to find an extra £31million next year to balance the books as a result of soaring costs and inflation and demand for services.
But an additional report published two days later, which will also be considered by members on Tuesday (October 4), includes a “worst-case scenario” where the gap for the 2023/24 budget is double that, at £62million. It then rockets to £83.8million the following year before climbing steadily to a peak of £87.6million in 2027/28.
The forecast also includes a best-case projection for the deficit of £13million for the 12 months from next April and staying relatively stable before hitting a high of £14million in five years. The £31million figure given by the council last week was the expected shortfall for 2023/24 in the “base-case” scenario, which is the most “realistic”, the report said.
Read more: Inflation and demand for social care leaves Bristol City Council needing to find £31m
It said: “If we assume the worst possible outcome in the case of each of the key variable factors which impact the council’s financial performance we produce a ‘worst’ case view. It indicates a peak funding gap of £87.6million over the medium-term financial plan (MTFP) period with £62million in 2023/24.
“This scenario assumes high inflation levels, a poor financial settlement and claw back of the grant allocations for the Health & Social Care Levy following the reversal of the scheme.” The report said uncertainty about inflation was the “most significant driver” in the organisation's potential costs being much higher than the base-case prediction, with an average of seven per cent above assumptions accounting for £27million over the MTFP’s five-year timeframe.
It also poses a “financial risk to a range of services across the council” including adult and children’s social care services, energy prices, rising fuel and labour costs and waste management contracts. The report said: “We are in a period of unprecedented economic uncertainty which is having a significant impact on the ability to forecast with accuracy, and in reality with the scale and volatility of the current climate, the only certainty we have is that this reported financial position will be subject to change.”
It said the worst-case scenario referred to the “most extreme situation that can happen if things don’t go as planned”. But as city Labour mayor Marvin Rees said last week when the original papers were published, the authority will need to “change the way we do things” in some core services to “focus our attention on those who need support most” even in the most realistic circumstances.
He added: “There are also some other things we won't be able to continue to do, and, in many cases, we will have further conversations with our partners on how the city can, collectively, support those services, actions, and activities we can no longer sustain.” The MTFP is not the annual budget-setting but provides the framework for that and the longer-term financial planning.
Cabinet will recommend the full budget next year to full council to approve in February, while money-saving proposals will go out to public consultation.
Read next:
- South Gloucestershire Council faces £29m gap amid cuts warning
- Ombudsman criticises Bristol City Council in annual review
- Bristol City Council's biggest deals need investigating, claims councillor
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