East Sussex County Council should consider financial support bid, accountants say

On Tuesday (November 11), the council’s cabinet is due to consider a report updating members on the authority’s planning for the upcoming financial year.

The report sets out a challenging situation for the council, warning of an estimated £55.84m deficit in the 2026/27 financial year.

Officers warn how this will require the council to look into further savings and service reductions, coming on top of the £16.2m savings agreed in February and the more than “£140m already delivered since 2010.”

A council spokesman said: “At this point, any further savings proposals are expected to have significant impacts on residents, partners and staff, as well as the organisation’s capacity to respond to new demands and transform services.

“Despite this, given the current financial outlook, it is recommended that officers bring forward specific savings proposals for consideration to support the budget position.”

The report says the council — even if it makes further savings — may need to seek Exceptional Financial Support (EFS) from the government to set a balanced budget.

The council has commissioned the Chartered Institute of Public Finance and Accountancy (CIPFA) to carry out a Financial Resilience Review.

CIPFA’s review has been published as part of the report to cabinet. It 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.

In the review, a CIPFA spokesman said: “Overall, the council benefits from strong governance, respected financial leadership, and prudent treasury management. These provide a solid platform to address the significant financial risks.

“However, the scale of structural underfunding in demand-led services, coupled with declining reserves, rising placement costs, and future borrowing needs, places the council under mounting pressure.”

The spokesman added: “To maintain sustainability, East Sussex will need to maintain its focus on the tough decisions and consider the need for EFS as part of its budget development for 2026/27.

“This includes early preparation for different scenarios, assessing partnerships with a focus on cost share and priorities and strengthening procurement and workforce capacity.

“Ultimately, this may require further consideration of what a minimum future operating model could look like.”

Among other measures, CIPFA says the council should: look at what further early action it can take on savings to reduce reliance on reserves; continue its discussions on the potential need for EFS; and maintain its focus on the minimum operating model and potentially reassess its core offer.

In a document setting out the council’s responses to these recommendations, officers say the authority “will be writing to the Ministry of Housing, Communities and Local Government to request to open formal discussions on an application for EFS.”

In their report, council officers warn that EFS “is not ‘free’ money”. They say it would require the authority to borrow to fund day-to-day spending and/or raise council tax above the referendum limit. Officers note how such council tax increases are already factored into the council’s financial planning.

Officers also said the council had “been clear that recent savings have taken it below the previously defined core offer and consideration will be given to reviewing its offer in light of the ongoing financial challenge.”

CIPFA says the council should “strengthen its data and analytics capability in Children’s Services”.

It says the current data systems have presented challenges in fully understanding the patterns and demands facing Children’s Services, making it difficult for the council to plan and respond effectively to the continued pressures and overspends.

CIPFA says these systems present particular challenges when “consolidating child level costings across teams, which is key when considering the number of high costs cases that the council is dealing with.”

The review notes how some of these cases cost more than £1m annually. They say these high cost cases are often appearing from hospital discharge and adoption breakdown, with seven children currently costing the council more than £8m.

In its response to this recommendation, the council says it is investing in the Children’s Services Essential Development Programme — a 4-year IT systems development programme from 2024-2028.

The council says the programme was designed to tackle the biggest risks in core systems, to help the council safely respond to rising and more complex demand.