Calls for financial support “no reflection” on Eastbourne council, says leader

Calls for exceptional support are “no reflection” on the Eastbourne Borough Council’s ability to manage its finances, the authority’s leader has said.
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On Wednesday (February 7), cabinet members considered a report setting out the authority’s budget proposals for 2024/25, ahead of a full council decision later the same month.

As previously reported, the report sets out how the council has requested additional financial support from the government to set its budget in light of a sharp rise in homelessness costs.

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Council leader Stephen Holt (Lib Dem) said: “This is going to be a particularly challenging year, but that is no reflection upon the ability of this council to manage our finances, which has seen us make savings of over £6m … over several years.

“But is very much a reflection of the extreme cost of living pressures at the moment and indeed the extreme pressures with regards to temporary accommodation placement that this council and councils up and down the country are currently facing.

“The good news, following the Westminster conversations and indeed that first meeting we had in October, is that we are not alone.

“We are doing whatever we can to work cross-party to ensure that we are representing the views of both our own authority and … authorities from Conservative councils, Labour councils, Green councils and Independent councils who are all saying with one unified voice, ‘whatever your political belief is, this situation cannot go on any longer and there is a national crisis which is very much threatening the safety net that councils provide’.”

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In an unusual step, the budget proposals endorsed by cabinet members asks the council as a whole to sign-off on several potential options, with the final course of action dependent on the level of financial support provided by the government.

The first option is — described as the council’s preferred option — would be for the government to fully cover the authority’s additional costs for temporary and emergency accommodation in 2023/24 and 2024/25.

Failing this, the council is asking the government to provide Exceptional Financial Support (EFS) totalling £6m. This would be made up of £3m to offset the homelessness overspend in 2023/24 and a further £3m in 2024/25.

If its application for EFS is unsuccessful, the council says it will need to use a significant amount of its reserves instead.

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This will likely bring the council’s general reserves below the minimum threshold of £2m. The council says it would then need to put in place immediate plans to reduce its spending on services by around £3m in 2024/25. This would be done in order to replenish its reserves to above minimum levels.

The council says it would still need to draw money from its reserves if its EFS application is successful (for a total of £1.716m), but would be able to avoid its reserves dropping below their minimum levels. It would also be able to put some money back into reserves in the near future.

The papers also set out a fourth option, involving a 7.99 per cent increase in council tax as well as EFS, but Cllr Holt said this proposal had been withdrawn.

In a statement released after the meeting, Cllr Holt said: “My preferred option is that exceptional financial support from the government will allow us to set a balanced budget.

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“However, if this support doesn’t materialise, we will have some incredibly tough and difficult decisions to take about the services we deliver, allied to the use of our reserves.

“What is clear, and this an observation shared by commentators and experts from all sides, is that the system of funding is broken, it is no longer fit for purpose and without fundamental changes the future of local government is in doubt.”

Even with full financial support from government, the council would still be seeking to deliver £3.8m of savings contained within its Stability and Growth Programme. The council says it expects to achieve a net savings figure of £1.9m in 2024/25.

The council is also set to increase its council tax demand by 2.99 per cent, the maximum allowed without a local referendum. This would see a band D household pay £277.74 next year, an increase of £8.06 on the bill for 2023/24.

The options also assume an increase in council house rents.

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The proposals are set to be put to a full council vote later this month. If they are agreed at that meeting, authority would then be delegated to senior officers to carry out the option which reflects the amount of support provided by the government.