Financial Challenges At East Sussex Council As Nearly £17m Overspend Predicted

Increasing costs around children in care are putting pressure on East Sussex County Council's finances.

According to a monitoring report discussed by cabinet members on Thursday (September 28), the council is currently predicting a £16.8m overspend by the end of the 2023/24 financial year.

The vast majority of this overspend (£15.2m) is expected to come from the authority’s Children’s Services budget, with £14.2m arising from costs associated with Looked After Children (LAC) alone. 

While still early in the financial year, Cllr Nick Bennett, cabinet member for resources and climate change, told councillors the council was looking to find mitigations elsewhere to reduce the pressure.

He said:

“This is a challenging financial position, but, as ever, mitigations have been found within treasury management, centrally-held budgets and corporate funding.

“There is an underspend of £11m and includes the general contingency underspend of £5m. There is a planned £1.7m use of the in-year provision made for budgetary risks and an estimated £4.3m underspend on treasury management.”

According to the report, the overall number of children in care in East Sussex increased from 664 at the end of the 2022/23 financial year to 677 in the first quarter of 2023/24.

The report says it is currently unclear whether this increase is a ‘surge in demand’ or a ‘change in overall trend’. If the trend continues, the report adds, the total overspend could be set to increase by a further £5.6m by the end of the financial year. 

The report says this increase comes alongside a drop in the number of in-house and agency foster care placements available to the council, meaning more children are being placed in external residential homes at a much higher cost. In addition, the complexity of needs for some of these children mean additional ‘wraparound’ support packages are needed.

The report says these factors are “adding a significant budget pressure to the service”, attributing £12.7m of the overspend to the cost of external residential homes and the ‘wraparound’ packages. For context, the total children’s services budget is a little over £117m. 

The council’s chief executive Becky Shaw said these pressures are not unique to East Sussex, with other authorities facing similar challenges. She said:

“The team are under really intense pressure, as the performance and the money will demonstrate. 

“This authority is no sense on its own. It is something that I am working hard with my peers. We’re working hard at a member level and lobbying government really hard to try and understand this is even more intense pressure on top of work across all departments that was already going on.”

The call for lobbying was echoed by Cllr David Tutt, leader of the council’s Liberal Democrat group. He said:

“Normally, the first quarter’s monitoring I don’t even bother to comment on, because in the first quarter things are just settling down. 

“This time, I think there is cause for us all to have concern; a £16.8m forecast overspend after three months is worrying, particularly in the context of looking at £40m to find for the next financial year and £54m for two years time.”

He added:

“This isn’t a political argument between political parties in this chamber, it is in my opinion an argument between local government and national government of whatever colour. 

“We know that within the next 12 months we are likely to have had a general election, so I believe that we should be lobbying all political parties on these issues and the importance of local government and the way our communities look to us for the services they value the most.”