The deadline for Southampton City Council to outline how it plans to restructure its services to balance the books in the long term has been confirmed.

The city council has received in-principle approval for up to £121.6million in emergency financial support from government.

The capitalisation direction, which allows the council to use capital resources to cover revenue costs in 2024/25, is set to involve selling off assets.

Details on how the council intends to deliver the required ‘transformation’ will be presented to councillors before it has to be submitted to government in late August.

The requirement to produce a transformation and improvement plan was one of two “significant” conditions set by the Department for Levelling Up, Housing and Communities (DLUHC).

Cllr Lorna Fielker, leader of the council, said: “We must submit our transformation and improvement plan to the government by August 27, and prior to submission it will need to be approved by the cabinet.

“It does not require council approval, but we will be presenting it to full council so that all members of the council can comment and the plan will be published as part of the appropriate meeting papers.

“The overview and scrutiny management committee will also be able to scrutinise the plan in a public meeting should the chair of the committee choose to do so.”

The second condition set by DLUHC concerned the government commissioning an external assurance review on the council’s use of exceptional financial support and its progress on closing the structural deficit in future years.

Southampton City Council was one of 19 authorities to be granted a capitalisation direction for the next financial year.

The government department is currently working through proposals to launch the reviews.

It is expected completed reviews will be published by DLUHC at a later stage. An exact timeline for this process has not been confirmed.

The financial support for Southampton City Council has been broken down into five areas:

  • £39.3m to offset the 2024/25 budget deficit
  • £10.6m to cover transformation and improvement costs
  • £12.2m for potential restructuring costs
  • £7.5m for potential unforeseen events not covered by reserves
  • £52m to cover a potential equal pay claim liability

The capitalisation direction, which was announced last month, saved the council from entering effective bankruptcy.