Southampton: Council axes jobs and may need emergency loan

Civic chiefs have reduced the size of the authority's budget shortfall for the 2024-25 financial year but more money needs to be found.

The council says it may have to apply for what is known as Exceptional Financial Support from Whitehall.

If its plea is rejected and the authority is unable to balance the budget it will have to issue a Section 114 notice, which bans all but essential spending.

Simon Letts, cabinet member for finance and change, says the council is facing a genuine crisis (Image: Newsquest.)

Cllr Simon Letts, the city's finance chief, said local government was facing a "genuine crisis".

He outlined a set of cost-cutting and revenue-raising proposals that are due to be debated by the council's ruling cabinet on November 29.

They include raising tolls on the Itchen Bridge, forging ahead with plans to close Holcroft House care home, and reducing the number of agency staff working in children's social care.

People who own second homes, or properties that have stood empty for more than 12 months, will have to pay more council tax if proposed new national laws are passed.

The authority is also planning to axe a further 50 jobs but says some of the posts are already vacant.

The coucil is waiting to learn the content of the Autumn Statement, which will be delivered by Jeremy Hunt (Image: PA)

The size of any loan needed by the council will depend on the Autumn Statement on November 22, when local authorities will learn if the government is giving them extra funding for social care.

Cllr Letts said: "Exceptional Financial Support is not a handout. The government would lend us money, which we would be required to repay over a 20-year period.

"Our aim would be to ask for as little as possible so as little burden as possible falls on the taxpayers of this city."

At one stage the council was forecasting a budget shortfall of £55m for the 2024-25 financial year. 

This has now been reduced to £38.4m, thanks to the proposals due to be discussed by the cabinet. But the council still needs to find extra savings before the budget meeting in February.

In a statement, the council said there was a "significant risk" it would need Exceptional Financial Support from the government.

Cllr Letts said: "This is a genuine crisis, not just here but in local government across the country. It's likely that 25-30 other councils are in a situation identical or similar to the one faced by Southampton.

"It's an extremely stressful situation. There's not enough money in the system to run all the services local government is required to run."

Royston Smith, Conservative MP for Southampton Itchen, said: "The government understands the challenges of local government. I am hoping that understanding will be reflected in the Autumn Statement.

"But government are not responsible for the Labour council’s financial mismanagement.

"One way or another they are going to have to look to withdraw from their political pet projects which don’t directly benefit local taxpayers. This crisis was entirely predictable and some of us have been warning about it for months."