East Sussex County Council faces a “stark” financial position, a senior councillor has warned

Speaking at a cabinet meeting on Tuesday (November 11), Cllr Nick Bennett (Con) said the council faces an estimated budget deficit of almost £56m next year and has insufficient funds in reserves to cover the shortfall.

Councillors heard how the authority will be looking to find new savings and has begun the process of seeking Exceptional Financial Support (EFS).

Cllr Bennett, lead member for resources and climate change, said: “The position is stark. We await national funding announcements, the budget is on the 26th of November and the provisional local government settlement will be sometime mid-December.

“Our reserves are low and are insufficient to cover the deficit. With the purpose of setting a balanced budget in mind, officers are being asked to bring forward any further proposals that could reduce the deficit.

“The reasons for the shortfall have been clearly laid out in the context of increased demand for and the cost of delivering our services, particularly across social care.

“I don’t think this is news to anybody, but the level of difficulty is profound.”

Liberal Democrat group leader David Tutt said: “The situation is extremely serious. I think everybody in this council recognises that. It is also a very depressing set of circumstances; in order to meet our statutory obligations we would need more money than we have available.”

He added: “I commit my group to continue cross-party working with yourselves and others to lobby for a better settlement from government — that has been sadly lacking for many years — and to take a responsible course of action in terms of trying to formulate a set of budget proposals, which will provide the best results for the people of East Sussex.”

In June, the council commissioned the Chartered Institute of Public Finance and Accountancy (CIPFA) to carry out a Financial Resilience Review. This work is considered to be a necessary part of any EFS bid.

CIPFA says the council has demonstrated “sustained financial discipline and the willingness to take some tough and politically unattractive decisions”, but is at risk of exhausting its unallocated reserves as a result of its increasing budget deficits.

It makes recommendations to the council, including consideration around the use of EFS.

Such support is not expected to come in the form of additional grant funding and has previously taken the form of “capitalisation directions” — a process through which councils are given permission to treat revenue spending as though it were capital spending.

This would allow the council to take out a loan and/or sell off assets to find the money it needs to plug its deficit.

CIPFA also recommended the council should look at what further early action it can take on savings to reduce reliance on reserves; strengthen its data and analytics capability in Children’s Services; and maintain its focus on the minimum operating model and potentially reassess its core offer.