Agenda item

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 report 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 which projected a deficit of £36.5m for 2026/27, reduced to £24.6m if Council Tax were to increase by 5%. He explained that, going forward, the 5% Council Tax increase will be included as core spending within the medium term financial plan, as the Government have made this assumption in the recent funding reviews and reforms. He also set out the significant challenges that the Fair Funding Review presents for East Sussex County Council, including changes to the formulae which will redirect adult social care funding from elderly to working age adults. He highlighted that despite an increase in relative need in East Sussex, the Council would be unlikely to receive an increase in funding, due to council tax equalisation.

Use of reserves

5.3       The Committee discussed the use of reserves and asked why it had been necessary for the Council to rely heavily on reserves to cover the budget deficit for the last couple of years. The Chief Finance Officer, explained that the need to use reserves was driven largely by increasing need in the county for statutory services, particularly in Adult Social Care and Children’s Services. This increasing need had not been met by a proportionate increase in funding, and that the Government had not yet put forward long-term solutions for SEND provision and home to school transport. The Fair Funding Review could result in ESCC adult social care funding decreasing, due to the national shift towards funding for working-age people, whereas the bulk of adult social care spending in East Sussex is on older adults, particularly over-85s.

Savings process

5.4       The Director of Communities, Economy and Transport (CET) noted that savings had been made for many years, which in CET alone had been worth about £40m in the last decade. The ability to continue make savings has therefore become more difficult and would require examining all service costs in detail in order to be identified. The Deputy Chief Executive added that there were tight spending controls in place including a weekly recruitment sign-off process, and purchase order spending over £1,000 being examined by senior officers.

5.5       The Committee commented that the Council would have to be mindful of the needs of the new unitary authority when considering proposals as part of the RPPR process for future years. Cllr Collier commented that his preference was that if further savings were being made this year, they should be focused on universal services to avoid savings with a more direct human impact.

Council tax

5.6       The Committee asked if the Government were likely to consider removing the 5% referendum limit for increases on Council Tax. The Chief Finance Officer was not aware of any Government plans to do this, and noted that it is unlikely to change as the 5% increase is accounted for as part of local authority core spending power in the Fair Funding Review. However, the Fair Funding Review also included expectation of increases in requests for Exceptional Financial Support, which could result in higher Council Tax increases in those areas requiring it.

Fair Funding Review (FFR)

5.7       The Committee commented that the FFR would result in funding being allocated away from ESCC, which was counterintuitive as it is a well-run council. The Committee asked how the Council Tax base would change as a result of Local Government Reorganisation, and whether the new funding formulae would remain relevant in future years. The Chief Finance Officer responded that the Council Tax base is a publicly available data set that the Government are currently using for FFR modelling; whilst there are no plans to change Council Tax as a taxation system, the changing local authority landscape will have an impact on future years. The Government was looking to redistribute available public funding, which the allocations of the Recovery Grant had been indicative of, given that ESCC had not received anything from that grant when it would normally have expected approximately £6m from it.

Property

5.8       The Committee asked how the disposal of property assets could be used as a means to reducing the deficit, although noted that this alone would not deliver financial sustainability, and requested a future report on this topic. The Chief Operating Officer agreed that a report could be considered by the Committee under its work programme. ESCC assets have been subject to a programme of disposals over recent years, and that has partly funded the capital programme. However, the Council’s minimal remaining assets available for disposal had lower returns, due to the work required to make them suitable for the market. The Council maintains an Asset Management Strategy which runs until 2025; the Place Scrutiny Reference Group for this strategy had agreed to conduct a light-touch refresh of the strategy and would reconvene when there was more clarity on LGR.

Adult’s and Children’s services

5.9       The Committee discussed having more of a mixed economy in adult social care, with a combination of ESCC-run and private provision, noting rises in care fees, and asked if Government was considering reform to the care market. The Committee also commented that the Council should consider greater provision for youth services. The Deputy Chief Executive noted that these areas were within the remit People Scrutiny Committee, and could be referred to them for further consideration.

5.10     The Chief Finance Officer added that the Casey Review was ongoing, and any long-term reforms to adult social care would likely come after its completion. The Council has a close relationship with the Social Care sector in the county which is largely made up of many small providers. The cost of social care provision has risen in recent years due to rises in National Living Wage and Employers’ National Insurance, which increased costs for the Council. When considering whether to deliver its own provision, the Council had to bear in mind the cost of staffing, as it was more expensive to directly employ staff than to use private provision. For children’s services there are fewer providers which are able to charge much higher fees to ESCC, and there is a South East Regional Care Cooperative working collaboratively to reduce high cost placements.

Funding opportunities

5.11     The Committee asked if the Council was applying for all Government grant funding opportunities. The Chief Finance Officer responded that the Council had explored all available funding avenues and continued to look for all funding opportunities available to it, but that these opportunities are limited. The Director of CET added that resources are used in the bidding process for grant funding, so the council takes a targeted approach to bidding for funding which is most likely to yield results. The Deputy Chief Executive added that the associated costs of bidding for grant funding needs to be considered proportionately when applications are made. As grant funding is often short-term, it doesn’t necessarily provide ongoing funding, which was an issue also encountered by the voluntary sector.

Trading Standards

5.12     The Committee asked whether funding was received for enforcing the regulation of illegal tobacco and vape products in East Sussex. The Director of CET confirmed that new burdens funding had been provided by Government for the enforcement of the Tobacco and Vapes Bill.

Parking

5.13     The Committee noted that the State of the County did not include information on use of funding from parking charges and asked how parking surpluses supported public transport. The Director of CET responded that there is a delicate balance which limits the ability to raise funds through parking charges as overly punitive parking charges tend to have a negative effect, reducing overall revenue. Parking rates charged by ESCC had struck roughly the right balance, and would be uplifted in line with inflation. Funds raised through parking are also limited as they can only be used for transport benefit and were currently used to alleviate concessionary fare.

Housing targets

5.14     The Committee expressed concern that the rate of housebuilding in East Sussex would not meet the Government target of 4,500, and that the Council did not have sufficient funding to provide the necessary infrastructure for developments. The Director of CET confirmed that the new Mayoral Strategic Authority would have a responsibility to produce a Spatial Development Strategy, which would identify areas for development and help the Council plan for new housing. There were also a significant number of banked planning permissions in the county at the moment, where permission had been granted but building had not yet commenced.

Streetlighting

5.15     The Committee asked why there had been an overspend in the cost of electricity for streetlighting and why this had been unexpected. It was agreed an answer would be provided outside the meeting.

Social Value

5.16     The Committee noted that the outturn performance for social value in contracts had fallen from 31% in 2023/24, to 19% in 2024/25 and asked why this was. The Chief Operating Officer responded that social value outturn could vary significantly between years, as it only applied to procurements that don’t have pre-defined criteria which limited whether social value could be included as part of the contract. As the indicator is based on a small number of procurements, small changes could significantly change the outturn from quarter to quarter, as there were some types of procurements where providers such as SMEs and small care providers, would struggle with social value requirements in a contract. The Council was considering a more qualitative measure of social value, at which point the target will be reconsidered, and a future report would come to Place Scrutiny.

State of the County Report structure

5.17     The Committee discussed the information provided in the report and how it could be structure to provide for effective scrutiny input, including highlights and more concise information, although some members of the Committee commented that they found the level of information provided to be right. The Deputy Chief Executive responded that the report aimed to be as transparent and informative as possible, and the level of detail to provide for a varied appetite for information which the Committee had expressed, but the comments made would be taken away and considered.

5.18     The Committee RESOLVED to:

(1) Consider information within the 2024/25 end of year Council monitoring report and State of the County 2025 report and the implications for services within the remit of the committee;

(2) Agree key areas for scrutiny focus as part of RPPR planning; and

(3) Establish a 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 2026.