News / bristol city council
Council budget could face £117m shortfall in five years
Bristol City Council faces a mammoth £117m budget shortfall in five years’ time, and the funding gap for the upcoming 2026/27 financial year beginning in April stands at £20.8m.
The figures, which are outlined in the authority’s rolling five-year financial forecast called the medium-term financial strategy (MTFS), were revealed to councillors at the strategy and resources committee on Monday.
Green councillor Patrick McAllister believes the council’s ability to make better financial plans was “held hostage to the central government’s timetable”
They represent the expected shortfalls before the council considers new savings and income plans – which it must do to set a balanced budget as required by law – and is the difference between the money it expects to raise and what it will need to spend to continue current service levels.
Green councillor for Hotwells & Harbourside, Patrick McAllister, told the meeting that the organisation’s ability to make sound financial plans was “held hostage to the central government’s timetable”.
A report to the committee said: “This MTFS identifies a cumulative peak funding gap of £117.1m by the final year of the 2026/27 – 2030/31 period, with a funding gap of £20.8m in 2026/27.
“This gap will need to be closed via a range of short- and medium-term interventions and will require budget reductions, income maximisation, transformation and savings to be delivered to ensure a balanced budget for both the coming financial year 2026/27 and for the medium term.”
In a statement ahead of the meeting, the council said: “We already have actions in place to manage this pressure.
“Most of these actions are contained within major transformation programmes across adults and children’s social care, education and homelessness services.
“These actions include reviewing how much we pay for goods and services, establishing new contracts and ways of buying essentials such as temporary accommodation.
“The aim being to make the council a smaller, more efficient organisation whilst providing the services people need in these areas.
“We’re reducing the amount of property we manage in order to cut costs.”
Finance director Andy Rothery told the committee: “High inflation is impacting on our payments to providers, and we are seeing ongoing pressures on adult social care, children’s social care and temporary accommodation.
“This involves the council thinking more significantly about how transformation programmes address those budget gaps because it’s an ongoing challenge.
“We’ve based our estimates on the changes we may see from 2026/27 from the government’s fair funding review.
“We will know more details and how this impacts our budget following the chancellor’s autumn statement which we expect on November 26, and we are expecting the detail in the week commencing December 15.
“The resulting impact for new savings and income plans on our budget is a gap of £20.8m from next year, and over the five-year life of the plan this goes up to £117m.
“This is without mitigations, without new income and savings plans going in.
“It’s important to note that the financial strategy is a position statement and not the plan that proposes a balanced budget.
“We will be starting a consultation shortly on new savings plans.
“We will be finalising our plans to balance the budget over the next couple of months.”
Councillor McAllister said: “There’s a general theme throughout this that there seems to be frustration that we have so little control both of our own budgets and the information and timescale by which we get the information about what our budgets will look like in the future.
“It’s a sector-wide issue, but with the (chancellor’s) budget being put back until November we have much less time to make accurate forecasts for our financial planning.
“It’s hard to make good financial plans.
“We don’t know exactly how much money we need to make from savings.
“Our ability to make sound financial plans is held hostage to the central government’s timetable and we really need to see reform of those processes that govern local government finances.”
Council leader and committee chairman Tony Dyer said: “Although I’m generally in agreement, that’s not anything new – local authorities have had that before.
“What will hopefully be different this time is that the government is intending to give us a three-year settlement, which hopefully means we can plan better going forward because we should have the information we need up front.
“This move to having a three-year mutli-year settlement will hopefully give us the room to plan ahead more securely.”
The council will soon launch public consultation on proposals to cut costs and increase income to close the financial gap from 2026/27 as the process of setting next year’s budget begins.
Main photo: Betty Woolerton
Adam Postans is a local democracy reporter for Bristol
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