Agenda item

Report by the Chief Executive.

40.1     The Director of CET introduced the report and outlined that it was the Committee’s opportunity to reflect on the RPPR process and examine the future financial constraints on the Council. He referred to a recent presentation he had given to the Sussex Association of Local Councils, and the Committee asked if it was possible to go through the presentation outlining the financial challenges facing the Council.

40.2     The key points in the presentation were as follows:

·          The elderly population in East Sussex is increasing and the working age population is going to decline, which has a bearing on the demand for services. In the local economy, productivity is low in terms of Gross Value Added (GVA). Although there are some successes, there are fewer businesses in East Sussex. Full time earnings are lower than elsewhere in the South East.

·          The Rate Support Grant (RSG) received from central Government will be zero by 2020. The income from Business rates is static. So the only way to increase the Council’s income is by raising Council tax. Even so, the demand on services will create a funding gap of around £100million.

·          Business rate retention is not going to be the solution. To fill the funding gap will require a 23% increase in Business rates income, or a 12.99% increase in Council Tax, or 13,640 new homes to be built to increase the Council Tax base.

·          In reality there is likely to be no business rate growth, a cap on Council tax increases of 5.99%, and only 1,400 new homes were built in 2016/7. Although predicting housing growth for future years is difficult, both Hastings and Eastbourne have constraints so most development is likely to be in Lewes, Wealden and Rother. House building is slow and requires the necessary infrastructure. It is unlikely house building will reach the numbers needed to fill the funding gap.

·          So the financial picture is one of reduced income and unfunded cost increases (e.g. extended Special Educational Needs and Disabilities (SEND) support; national dispersal scheme for unaccompanied Asylum seeking children; inflation; minimum wage increases; apprenticeship levy etc.). The Council cannot match the demand for services with the funding it has available. So therefore it needs to make further savings. ESCC is not the only local authority in this position.

·          The journey ESCC has taken so far between 2010 and 2013 is that it has made £14.4 million savings; between 2013 and 2016 £64 million savings; and between 2016 and 2021 it will need to make a further £75 million to £85 million in savings.

·          The Council’s budget has reduced by £112million in last 8 years, and has a savings requirement of £17 million in 2018/19, £12 million in 2019/20 and £19 million in 2020/21. The Council is projected to have made savings of £159 million over 11 years, but will still have net budget of £370 million for 2018/19.

40.3     The CET department has used a commissioning approach to focus available resources on needs and plans to save £1.9 million in 2018/19. The savings plan for 2018/19 for CET includes Waste, Libraries and Grass cutting. Scrutiny input will be really important going forward, as well as managing public expectations of the services that the department can provide. There are opportunities for partnership working, such as with community run libraries, which may become more important.

40.4     The Committee asked what the CET share of the savings required was likely to be. The Director of CET responded that the CET proportion of savings would be around £1.5 million - £2 million of the Council total of £12million in 2019/120 and a similar amount in 2020/21. Over past 11 years CET has saved around £25 million of its budget.

RPPR Process

40.5     The Committee discussed the RPPR budget setting process for 2018/19. It was uncomfortable with the approach where public consultation on savings proposal takes place after the budget setting meetings in January and February.  The Committee felt that this may lead to mistrust by the public and it would be better to consult on savings, where public engagement is needed, before the budget is agreed.

40.6     The Director of CET commented that the savings proposal had been publicised well in advance through the three year Medium Term Financial Plan. It is important to agree a framework for making savings and then consult when more detail is needed. The Assistant Director Communities added that there is also an issue of having sufficient time to do a proper evaluation of need where services are being re-commissioned.

40.7     The Lead Member for Economy commented that the Council is limited by statutory duties and constrained by the reduced officer resource available. There is a limited number of officers available for research and analysis, which has an impact on the ability to develop proposals and consult in a timely way. The RPPR process has been good at engaging with community and limiting the impact on services. However, the Lead Member is not sure the Council can undertake the process any faster than it has been able to.

40.8     The Committee noted that the central objective must be for the County Council to properly and fully explain the serious financial challenges faced by the County Council and to gain public support and understanding of the extent of the problems giving rise to financial pressures. The Committee was not convinced that everyone is aware of just how serious the financial position is for the Council, and the legal requirement to agree a balanced budget. The Stand Up for East Sussex campaign needs to show this is not just about savings, but also the longer term impacts the savings are going to have on services. The Director of CET commented that the key point is that the amount of grant coming from central Government is reducing and the Council needs a better financial settlement mechanism.

40.9     The Committee highlighted one of the findings from the Libraries Scrutiny Review Board that retaining sufficient capacity to support communities to help themselves is really important. The Council needs to retain this capability if it is going to be asking communities to provide more functions for themselves. The Assistant Director Communities added that in the context of Libraries Strategy volunteers also need continued support, which is why the Strategy is funding a Volunteer Officer post.

40.10   The Committee discussed whether starting scrutiny work earlier on the savings proposals would have helped the RPPR process.  The Director of CET commented that it would be helpful to get scrutiny engagement as early as possible and would welcome a Scrutiny Review Board to start looking at future savings.  The Committee agreed that it would like to establish a Scrutiny Review Board to start work earlier on the RPPR process and asked what areas of work Scrutiny could engage in, based on what Cabinet or the department have in mind for further savings. The Director of CET stated that he can give indication of the areas that savings are likely to come from at a meeting of the Review Board. The task will be to look at what it is possible to take out of the CET budgets departmentally and weigh up the risks to service users.

40.11   The Committee Resolved to:

1)           Establish a RPPR Scrutiny Review Board to start to examine the budget savings required for 2019/20 which will meet initially on 14 June 2018 to start process.

2)           Recommend that when considering savings sufficient officer capacity is retained to support community organisations who may wish to take over the provision of services in line with the corporate priorities.

3)           Recommend that public consultation on savings proposals are undertaken earlier, where public engagement is necessary, so that the results are known before budget setting meetings in January (Cabinet) and February (Full Council).