Agenda item

21.1     The Deputy Chief Executive introduced the report, and set out that the report provided an opportunity for the Committee to review the November 2025 RPPR report to Cabinet, which included an update on the financial and policy context, updates to the MTFP and capital programme, and the CIPFA Assurance Review report.

21.2     The Chief Finance Officer provided an update on the Council’s financial position, explaining that the Council had a projected deficit of £55.8m and it did not have sufficient reserves to bridge this. Despite this, the CIPFA review had reflected good governance and financial management and the Council having a clear understanding of the financial challenges it faced. In light of the challenges Cabinet had requested further savings options be brought forward but these were not sufficient to address the deficit and the Council was therefore beginning the process for applying for Exceptional Financial Support (EFS).

21.3     At the end of November 2025, the financial policy statement and response to the Fair Funding Review 2.0 was announced, which modelling suggested would likely cause a real-terms loss in funding for ESCC, as well as many other county areas. This loss in funding was due to council tax equalisation being set at 100%, the Area Cost Adjustment only being reflected in Adult Social Care (ASC) and the new ASC formulas shifting weighting to working-aged people. In addition the Government was continuing the Recovery Grant, which ESCC did not benefit from. The Government indicated that it expected the number of authorities applying for EFS to increase. The Provisional Local Government Finance Settlement was expected in December 2025, which would provide more detail on the Council’s position. The Autumn Budget was also delivered in late November 2025, which included an announcement that the in-year SEND deficit being taken into Government departmental budgets from 2028-29, though this money will be top-sliced from available local government funding. This would also not address the existing accumulated deficit, currently sitting on local authority balance sheets through a statutory override, which was projected to reach £14bn nationally by 2028/29.

21.4     The Committee discussed the report and update on the Council’s financial position and that Government had recently published the new Indices of Multiple Deprivation which showed significant deprivation across the county, and in particular in parts of Hastings. Members noted that the reduction in funding the Council would receive would not support addressing the needs of the population of East Sussex.

21.5     The Committee commented that in the report the natural environment was a constraint to economic growth, and requested that this language be reviewed to reflect the benefits of the county’s natural environment and that economic growth must work alongside the needs of the environment. The Deputy Chief Executive agreed to review this language in future reports.

21.6     The Committee discussed the areas of greatest spend which were in on ASC and Children’s Services and suggested that it would be helpful to understand the level of spending figures for private sector and out-of-county placements, however it was noted that these areas were outside the remit of the Place Scrutiny Committee.

21.7     The Committee asked whether procurement of Home to School Transport, was an area that fell within the remit of the Place Scrutiny Committee and therefore if it was an area that it could review. The Deputy Chief Executive responded that it sat within CET and there was therefore no reason the Committee could not look into it if it chose to.

21.8     The Committee discussed the importance of reviewing contracts to ensure that spend was limited to essential areas and contracts were not renewed as a matter of course.

21.9     The Committee discussed the use of AI in the council and the importance of ensuring clear guidance is in place for the implementation of AI solutions, to ensure data security. They discussed different approaches to implementing AI and the potential benefits of encouraging staff to use AI to innovate solutions and improve efficiency, as well as looking to automate processes where possible, although noted that this may come with higher upfront costs. Some members expressed reservations in additional investment in AI. The Committee also discussed the focus on digital modernisation at part of wider public service reform, and asked if ESCC was taking advantage of all available opportunities, such as from Government or the LGA, to increase modernisations and improvements.

21.10   The Chief Operating Officer commented that ESCC was rolling out the use of AI responsibly, including with a new AI Policy, and that the MTFP included a small amount of investment in AI and digital solutions. Staff were being encouraged to utilise the free version of MS Copilot: Copilot Chat, which came as part of the Microsoft 365 license with no additional cost. There was also targeted use of AI where there was a clear business case for it, such as using PowerBI, Formflow and Magic Notes in ASC and CS, where the use of these tools freed up caseworker time. Investment in AI relied on data maturity and effective processes, and teams were taking advantage of the LGA’s offer in this area. The Council were also examining other authorities’ approaches to using AI to develop business cases for future projects.

21.11   Cllr Hollidge expressed his concern about the lack of investment in highways and suggested consideration be given to borrowing to increase investment in highways. The Director of Communities, Economy and Transport responded that ESCC has historically invested over and above the grant funding received from Government, which was possible due to ESCC’s ability to borrow funds for this at the time. Borrowing to invest came with a ongoing cost, and given the Council’s financial position it was longer able to borrow for this. This meant that highways maintenance spending was now limited to the grant expenditure.

21.12   The Committee discussed the SPACES programme and what barriers existed in delivering asset disposals. The Chief Operating Officer outlined that there were some constraints within property teams and Legal Services due to historic savings in these teams, which limited capacity in this area. The Council was at the tail end of the assets it was looking to dispose of, many of which came with complications that made the process more challenging. This included them not being in a position to take to market, either due to work being needed, legal constraints and planning issues, all of which added complexity.

21.13   The Committee asked if there was more information on the future role of the National Audit Office. The Chief Finance Officer commented that further detail from Government was awaited.

21.14   The Committee discussed whether shared services sat within the remit of Place and was an area it could look into. The Deputy Chief Executive explained that if shared services sat within the Business Services Department (BSD) the Committee could scrutinise them if it wished.

21.15   The Committee noted Recommendation 10 of the CIPFA report relates to renewing partnerships with the NHS and district and borough councils. The Committee discussed setting a protocol for working with local partners through Devolution and Local Government Reorganisation (LGR), particularly where decisions taken my impact on the future unitary council. The Deputy Chief Executive clarified that ESCC works extensively with the NHS through ASC and will be working closely with Districts and Borough Councils through the LGR process. Scrutiny would be involved significantly in the LGR process once the Government had made its decision on the shape of new councils.

21.16   The Committee discussed the suggestion in the CIPFA review that a fundamental review of fees and charges could take place through benchmarking, and whether this sat within the remit of the committee. The Deputy Chief Executive explained that this would depend on which department fees relate to as the Committee would need to ensure that any fees reviewed fell within the remit of the Place Scrutiny Committee, so that the impact of those fees and charges could be better understood.

21.17   The Committee RESOLVED to:

(1)  note the information in the attached RPPR Cabinet report of 11 November 2025; and

(2)  identify any further work or information needed to aid the Scrutiny Committee’s contribution to the RPPR process for consideration at the RPPR Board, or as part of the committee’s ongoing work programme.