Cuts being made by Southampton City Council have brought its deficit down to £7.7 million - but officers say they will miss out balancing the budget by at least £3m.

In July last year the city council confirmed it had commenced “informal discussions” with the government as it had forecasted a budget deficit of almost £30m for 2023/24 due to inflation and rising interest rates.

In its October medium-term financial strategy, the council identified “significant savings” of £16.6m, bringing its 2023/24 budget pressure to £14.1m.

To help “precarious” finances, it included cuts in the arts centre budget, a reduction in IT staff, ending the city’s pothole patrol and hiking parking charges. The council is also holding a fire sale of assets.

The authority was able to reduce forecast overspending from £21 million initially down to £13.9 million at the end of November 2023.

But at Tuesday’s cabinet meeting, officers revealed that the council has managed to reduce the shortfall to £7.7 million as they try to deliver a balanced budget. Failure to do that would see it issue a section 114 notice, effectively declaring bankruptcy.

Officers said there is “hope” to reduce the in-year deficit “even more” and get it down to between £3m and £5m by the end of the year.

Leader of Southampton City Council, Cllr Lorna Fielker, said that the officer’s work allowed the council to progress.

Cllr Fielker said: “It is important to note the good progress made and the good work done by officers who worked incredibly hard over the past few months. Thank you very much. Long may continue.”

The council previously outlined that it still faced budget shortfalls over the medium term with forecasts of £37.8m in 2024/25, £44.9m in 2025/26 and £52.4m in 2026/27.

A recent and damning report about the council’s ability to manage money said it had “not been able” to manage its financial sustainability since 2022/23 due to overspending and reserve reduction.

It was also revealed that the council did not have “proper arrangements” in place in 2022/23 and 2023/24 to enable it to “plan” and “manage” its resources to ensure it could continue to deliver its services.

Despite the overall reduction from a £30m budget gap to £7.7m, the cabinet report said the council still faced significant forecast shortfall for the children and learning directorate (£6.58m), corporate services directorate (£2.35m) and wellbeing and housing directorate (£3.23m).