Agenda item

Report by the Chief Executive.

5.1       The Deputy Chief Executive introduced the report which starts the Committee’s consideration of the budget setting process. The report provides an opportunity for the Committee to look back at the Council’s performance through the year end Quarter 4 Council Monitoring report, and a look forward via the State of the County report. The key theme is the financial challenge the Council is facing through increases in demand for services and increasing costs. The State of the County report sets out in more detail the nature of the challenges for services in terms of cost and changes in policy. The report also asks the Committee to identify areas of interest or focus, and where it would like further information as part of its RPPR work and work programme.

5.2       The Chief Finance Officer outlined in more detail the Council’s financial position and that at the end of the financial year 2023/24 the Council had an overspend of over £30 million. After the use of corporate funding this was reduced to £10.5 million and required the use of one-off grants, collection fund surplus and corporate financial reserves to mitigate this and achieve a balanced year end budget position. This was the first time the Council has had to use the financial management reserve to balance the year end position.

5.3       The State of the County report contains the three year Medium Term Financial Plan (MTFP) which before scenario planning shows a forecast financial deficit of £55.3 million rising to £83.6 million by 2027/28. There are unallocated financial reserves of £16.7 million. However, even with scenario modelling there is a budget gap of around £26.6 million for the next financial year. Officers are seeking opportunities in all areas within departments to reduce this budget gap. This includes a review of the capital programme to reduce borrowing by scaling back projects as the cost of borrowing, which is £750,000 for every £10 million borrowed, has an impact on the revenue budget. There is a high degree of uncertainty regarding future funding, including from central Government, and different scenarios will continue to be modelled.

5.4       The Committee discussed the report and raised a number of questions and comments. A summary of the discussion is given below.

5.5       Councillor Hollidge asked for clarification on whether the Long Term Plan for Towns funding for Bexhill (page 76 of State of the County report) could be listed under Bexhill as the area rather than Rother District Council so it is clear which town the funding is for. The Director of Communities, Economy and Transport (CET) outlined that the funding may be listed by local authority area, but he could look at the way the funding is listed.

5.6       Councillor Hollidge also asked for clarification on the bathing water quality chart in the State of the County report as the Bexhill beach water quality (Edgerton Park outfall) has only been reported as ‘sufficient’ since 2019 according to Environment Agency data and this is not reflected in the chart in the report. The Director of CET agreed to clarify this point outside the meeting. (Post meeting note: The source data has been checked and the State of the County report updated to show the correct data for 2023 with the Bexhill beach bathing water quality classified as ‘sufficient’).

5.7       The Committee thanked officers for the report on the Council’s financial position and noted that this was the right time to involve the Committee in the discussions about the financial challenges the Council faces. Much of the challenge is around the provision of statutory services in Children’s Services and Adult Social Care, and in respect to Children’s Services the Council needs central Government to meet the demand led pressures the Council is facing in the provision of these statutory services.

Areas of focus and requests for further information

5.8       The Committee commented that it would like to see the information and assumptions behind the range of options under consideration to tackle the financial challenges the Council is facing. In particular, it will be important for the Committee to see the facts, figures and rationale behind the difficult choices that might need to be taken on next year’s budget and to be able to understand the assumptions and processes used to support decisions at an early stage.

5.9       The Committee identified two areas where it would like further information. These were the review of the capital programme and whether the Council could explore further the use of its land and property assets to generate more income or gain capital receipts from the disposal of assets. It would also be helpful to understand and model the impact on the revenue budget of selling assets and using the receipts to support the capital programme and reduce the cost of borrowing. The Chief Finance Officer commented that work is already taking place in these areas and the ability of the Council to borrow has reduced in recent years as Government guidance has been tightened. In terms of assets, the Council does not have a lot of assets and a level of disposals to fund the capital programme is already part of the way the capital programme is funded before borrowing is undertaken.

Cultural Investment and recovery – Sussex Story works.

5.10     The Committee asked for further information on what went wrong in the delivery of the contract for this work and any lessons learnt. The Director of CET responded that he did not believe that there had been a failure in the procurement process and the issue was the performance of the supplier in the quality of the delivery of the contract. The partners were not happy with the quality of the work provided by the supplier and therefore decided to terminate the contract and retender the remaining elements. There are many reasons why suppliers can run into problems and the procurement process was rigorous with clear mechanisms for the assessment of the quality and value for money of bids.

Staffing and Staff Absences due to mental health issues.

5.11     The Committee noted that the number of days related to mental health absences has increased compared to last year. It asked if the Council could look at the outcomes from the South Cambridgeshire Council trial of a 4 day working week to see if the reported benefits of cost savings, staff recruitment and retention and improved mental health could be applied at East Sussex County Council (ESCC). The Committee also commented that it would be helpful to understand how changes in staffing could help close the budget gap. The Chief Finance Officer commented that the departments are considering staffing structures as officers explore potential options for reducing the budget gap. Any changes have the potential to impact on the overall structure of the Council and will be considered as scenarios are explored.

Percentage of roads requiring maintenance.

5.12     Councillor Stephen Shing asked if in future reports comparative figures could be provided for the number of roads that require maintenance that equate to the percentages in the report. The Director of CET noted the point around understanding the number or length of roads requiring maintenance represented by the percentage figures in the report.

Delivery of the A27 improvements.

5.13     The Committee asked about the delayed timescales reported for the delivery of improvements to the A27 which had been pushed back to 2035, and whether the Council could lobby for the improvements to be made sooner. The Director of CET outlined that it is difficult to know what decision the future Government will make on the Roads Investment Strategy for improvements to the A27 East of Lewes. However, the Council and Transport for the South East will continue to lobby for improvements to this route which is part of the Strategic Road Network.

Air quality.

5.14     The Committee asked if the Council needs to carry out air quality monitoring across the County to address poor air quality in areas such as Eastbourne and to monitor the impact of new development. The Director of CET clarified that air quality monitoring is the responsibility of the District and Borough councils and air quality varies for a number of reasons. Air quality action plans are developed based on the monitoring information which can have links to ESCC functions such as transport.

Sustainable Warmth Scheme and Energy saving workshop for managers and school caretakers.

5.15     The Committee asked if there were any figures or measures available for the amount of money or energy saved by households as a result of the scheme and the amount of CO₂ equivalent that has been reduced. Also, it would appear to be a cost efficient way of reducing energy use and whether there was any indication that the Government may reintroduce such a scheme. The Committee also asked if the Council has any indication of how much the workshops have reduced school heating bills by. The Director of CET agreed to provide some figures for savings and reduced CO₂ after the meeting. In terms of reinstating the Sustainable Warmth Scheme, it is not quite certain how much priority the Government will give to this but appears to be keen on decarbonising housing and transport and Great British Energy may play a role in this. The Committee commented that it would be helpful to have a list of all the schools and how they are heated and whether they have solar panels or other decarbonisation measures. The Chief Operating Officer agreed to provide a list of a schools and what their fuel source is together with any change in energy use, but it may be difficult to attribute this to the training that was provided.

Report on climate adaptation.

5.16     The Committee asked when the ARUP report would be published and whether it would be available in time to inform budget decisions this year, as climate adaption will have an impact on the Council’s services. In addition, reacting to climate and infrastructure failure events can cost money and some analysis of this would be helpful.

5.17     The Director of CET agreed to check and come back to the Committee on when the ARUP report would be available. In terms of the budget, generally climate adaptation and resilience measures incur an additional cost. There is a national climate adaptation programme that sets out activities various sectors, including local government, should pursue and it will be interesting to see how the Government addresses this. Historically there has not been a great deal of Government funding for this, and therefore any work on, or investment in, climate adaptation and resilience measures would have to be funded from existing budgets or borrowing which is very challenging. The Director of CET acknowledged that the cost of reacting to events can be more costly than investment in adaptation measures, but this is constrained by the available funding. The Chief Operating Officer added that organisational resilience is something that the Audit Committee looks at and that the climate adaption report may also be included as part of that work.

Risk Register - Cyber Attack.

5.18     The Committee commented that the mitigation measures for cyber-attack on the strategic risk register refer to prevention rather than prevention and recovery. If the Council were to suffer a successful attack, would the Council be able to recover from it. The Chief Officer responded that recovery can be included in the risk register and expand the description to include the implications of an attack and the actions that would be needed.

5.19     The Committee RESOLVED to:

1)    Note the information within the 2023/24 end of year Council monitoring report and State of the County 2024 report and the implications for services within the remit of the committee;

2)    Request information on the range of options under consideration to tackle the financial challenges the Council is facing; the outcome review of the capital programme; and the impact of any asset disposals or additional income generation from assets on the budget position;

3)    Establish an RPPR scrutiny board to consider the developing Portfolio Plans and financial plans and to submit scrutiny’s final comments on them to Cabinet in January 2025.