A ‘challenging’ year has left West Sussex County Council having to draw on its reserves to balance out a 2019/20 overspend of more than £6m.
During an online meeting of the cabinet, members were told the revenue budget – money spent on everyday costs such as staff wages – was £16.3m in the red at the end of March, reducing to £6.3m thanks to investments and business rates grants.
Cllr Jeremy Hunt, cabinet member for finance, told the meeting the overspend was actually some £500,000 less than had been forecast at the end of December.
He said: “I’m not trying in any way to suggest that in normal circumstances this overspend is something that is acceptable – clearly it is not.
“It is obviously disappointing and going forward it needs to be addressed.”
Cllr Hunt called the overspend ‘a one-off occurrence’ which the council was able to balance due to ‘sound financial management’.
One of the biggest contributing factors to the overspend was the Children & Young People’s Services budget, which was £12.1m over the top.
This was a direct consequence of the council failing to keep the service up to scratch, leading to an Ofsted rating of ‘inadequate’ and the service being placed in the hands of an independent trust.
Disregarding money which has to be spent – such as a £20.5m Covid-19 Emergency Fund grant – the council’s budget management reserve has dropped to £126.2m – £14.4m down on those held at March 2019.
Announcing plans to replenish that by £3m per year for the next four years, Cllr Hunt said reserves were at a ‘reasonable’ level thanks to the council’s ‘efficiencies and savings’.
A report to the cabinet, though, showed West Sussex had failed to achieved 30 per cent of it’s planned savings, totalling £6.7m.
If the past year has been challenging, the months ahead will be unprecedented, financially and otherwise.
But despite having propped up the revenue budget with reserves, Cllr Hunt was reluctant to do the same for pandemic costs.
He said: ”Unless we are forced to do so, the use of our reserves to try to address those financial pressures is neither a simple nor, in the long-term, an acceptable solution.
“Using up reserves is a very slippery slope – often with only one likely outcome.”
Labour leader Cllr Michael Jones called the council’s financial situation ‘dire’.
The cost to the county council of a three-month pandemic lockdown has been estimated to be £85m – with the implications being felt years down the line.
The government has so far allocated £36.5m of emergency funding to the council – but Cllr Jones felt more was needed, including the idea of asking for all local government debt to be written off.
Cllr Hunt said: “We are constantly lobbying government regarding the funding we need.”
By Karen Dunn, local democracy reporter