Urgent action is needed to improve the council’s financial situation, a report has warned.

The report by Brighton and Hove City Council’s external auditors included a red-rated judgement and warned that “the council’s financial position is becoming significantly more challenging”.

It states the budget gap for 2023/24 was forecast to be as high as £21 million and warned of “considerable concern for the medium term” and that “tough financial decisions will need to be made”.

It said: “2021/22 financial performance was cushioned by one-off covid-19 payments, enabling the council to finish with an underspend.

“However, 2022/23 is an extraordinary year. Unlike in previous years, it is unlikely that the council will be able to recoup its already predicted overspend. The reserves balance is low and concerning.

“Tough financial decisions will need to be made in the medium term to manage this precarious position and ensure financial sustainability.”

The report cited unprecedented pressure on the council’s funds, including Brexit and issues with children’s and adult social care.

It comes as the council prepares its budget for the year ahead, with concerns already raised about a range of proposed savings, including the closure of a number of public toilets.

The Green administration said that around £20 million of savings would need to be found.

Councillor Siriol Hugh-Jones, deputy leader of the council, said that the report “should sound a loud alarm call for action from all parties”.

The Argus: Around £20 million in savings have to be found by the council for the year ahead to balance the budgetAround £20 million in savings have to be found by the council for the year ahead to balance the budget

She said: “We now face the awful decisions we never wanted to make and, in doing so, we must be aware of the impact on residents.

“We will continue to work to protect essential public services and minimise the disastrous impact of 13 years of Tory government austerity.

“There is no good news here. So far, we have seen little acknowledgement of the serious nature of the budget position from opposition parties.

“All councillors need to realise that the council has a duty to balance its budget - if councillors vote against any specific proposal, they need to be able to find savings elsewhere.

“Despite this, we continue to seek to work collaboratively with all parties to generate ideas to save our services.”

Councillors will meet on February 9 for a special budget meeting of the policy and resources committee, with a budget council meeting due to take place on February 23.

Council leader Phelim Mac Cafferty said: “The external auditor report of the council’s finances demonstrates what Greens have been arguing for every year of austerity: 13 years of Tory cuts have horrific consequences.

“Over that time, over £110 million has been stolen from our budget. The report states that there needs to be an urgent focus on our financial outlook.

“We urge all councillors to put the city first, recognise this is a warning of our financial stability and treat the situation with the seriousness it deserves.”