Reserves give chance to maintain service levels

A REPORT to be considered by East Sussex County Council’s Cabinet next week sets out a balanced budget which proposes no new cuts in 2024/25.

Yet it makes clear this would rely on using £14 million of the council’s limited reserves to meet a shortfall for the year and warns the deficit will grow in future years.

Despite extensive lobbying by the county council, the Government’s Autumn Budget Statement contained no new funding for local authorities to meet increasing pressures but did include updates which will further increase costs.  The report to Cabinet says Government “indicated that authorities should instead draw on their reserves to make ends meet”.

As well as using reserves, Cabinet members will be asked to recommend a £538 million net draft budget to Full Council which could include a Council Tax increase of 4.99 per cent, needed to cover the increase in costs and demand for the wide range of services provided to residents.

The increase, which includes the additional two per cent for adult social care allowed by Government, would equal an additional £1.62 per week on a Band D property.

The cost of providing vital council services has risen sharply across the country especially for children and adults’ social care, where the impact of Covid, complexity of need and cost of living pressures, has driven up demand. Inflation, market pressures and high profit margins by some providers in children’s services have also significantly increased costs.

The county council has added £50 million to its annual spending for East Sussex in the budget proposed for 2024/25 to help meet these pressures, though it is not being funded to match the increased spending.

While the gap between rising costs and available resources can be temporarily bridged for the year ahead, the report warns that the deficit is expected to grow to £45 million in 25/26 and £61 million in 26/27, with the use of reserves no longer an option.

Independent reviews of the council in the past year have found it is well-led and offers value for money. Referring to the use of reserves for 2024/25, the report states: “Previous robust and prudent management means we have this final safety net to see us through the next 12 months, but this is not a sustainable way to balance the budget.”

The council continues to call on central government for a more sustainable funding system and market intervention where necessary which will allow authorities to plan further ahead to meet statutory duties and local needs. The updated Council Plan included in the report sets out plans for services over the coming years and how the authority’s spending will be focused on priority areas.

The full Cabinet report is available at Agenda for Cabinet on Tuesday, 23rd January, 2024, 10.00 am | East Sussex County Council

A final decision on the 2024/25 budget will be made by Full Council on Tuesday, February 6.