East Sussex County Council faces its ‘most challenging financial position ever’

On Tuesday (June 24), cabinet members are due to consider the latest “state of the county report” — a document which begins the authority’s annual budget-setting process by setting out the context in which financial decisions need to be made.

In the report, chief executive Becky Shaw warns how the demand for and costs of the council’s services have continued to grow, but available funding has “not kept pace”.

Ms Shaw writes: “Pressures on services have continued to grow as the needs in our communities increase and become more complex, costs have escalated due to national factors beyond our control, and the funding we receive from government and can generate locally has not kept pace.

“We expect these pressures to be ongoing in the coming months and years and have a significant impact on planning for the future. The evidence base set out in this report shows how changing demography, needs and national reforms will continue [to] drive future demand for services and support.

“The gap between the funding we have and the cost of providing statutory services has now grown unsustainably and we have been realistic and honest about the substantial challenges this creates.”

She also says the council considers funding for preventative services to be the “best investment” it can make, as these services limit the number of people who need to access more intensive support. However, she warns how the council does not have sufficient funding to scale up or “even maintain these services to the level we would want”.

She goes on to say the authority is preparing its response to these pressures “from the most challenging financial position the council has ever faced.”

The council’s Medium Term Financial Plan (MTFP) predicts a £36.5 million deficit for the 2026/27 financial year. This deficit increases to £56.2 million by 2027/28 and to £70.8 million by 2028/29.

The report notes how these deficits are predictions and may be subject to change as a result of a variety of factors, including the full details of the Comprehensive Spending Review, funding reforms and a potential business rates reset.

It is also possible the county council may not exist by 2028/29, as the ongoing process of Local Government Reorganisation (LGR) could see it (and the county’s district and borough councils) fully replaced by a new unitary authority in April 2028.

The county council would be required to set at least two further budgets for the 2026/27 and 2027/28 financial years.

To set its budget for 2026/27, Ms Shaw says, the council will need to consider: further savings; the use of its remaining reserves; and a bid for Exception Financial Support (EFS) from the government.

She says: “None of the above options are desirable but the council will have no option but to undertake some combination of the above if it is to maintain financial sustainability and protect services to the residents of East Sussex, as we move towards the reorganisation of llocal government.”

These measures are likely to come alongside further increases to council tax, the report adds.