Budget gap at West Sussex County Council

West Sussex County Council faces a budget gap of £30million in 2025/26, even if council tax is increased by the maximum amount allowed.

The figures were shared during a meeting of the cabinet on Tuesday , July 23, where members received an update on the Council Plan and Medium-Term Financial Strategy. The report was the first step on the journey to setting a budget for 2025/26.

Deborah Urquhart, deputy leader of the council, said there was currently ‘great uncertainty and risks’ around the authority’s costs.

With pressures in adult and children’s services, a need to improve the condition of the highway network and an increase in the cost of borrowing to pay for infrastructure, roads and schools, Mrs Urquhart said the authority would need to raise council tax by ten per cent ‘just to stand still’.

At the moment, councils with social care duties – such as West Sussex – can only impose a 4.99 per cent maximum increase.

No word has yet been received from the new government about how large the council tax increase can be, how much funding local authorities will receive, or what grants will be available to them.

Mrs Urquhart repeated a point which councils up and down the country have long been making: “If government doesn’t fund local government adequately, we will be unable to deliver the services our residents expect and deserve.”

Council tax makes up nearly 80 per cent of the net revenue budget – money used for the day-to-day running of the council and its services. But the authority’s gross  spend is £2billion, the bulk of which comes from government funding.

Jeremy Hunt, cabinet member for finance, said: “In the face of ever-spiralling costs, it is essential that the government either fundamentally changes how many of these services are provided or ensure that we are properly funded in order to continue to provide them for our residents. We are not alone in this position as a majority of local authorities are facing similar or worse financial pressures.”

Without including council tax, the budget gap will be £60million in 2025/26 – with a cumulative deficit of £232million by 2029/30.

One area of major concern is the Dedicated Schools Grant (DSG), given to local authorities to fund schools, early years, and children and young people with high needs. And it never seems to be enough – currently, West Sussex has a DSG deficit of £70.5million, which is expected to increase to £129.5million by March, 2025.

There is an override in place which means councils have to keep DSG debts separate from their reserves – essentially, they stay off of the balance sheet. But that override is scheduled to end in March, 2026, so the authorities could find themselves having to take on the shortfall.

In West Sussex, estimates would put the deficit at about £216million by then.

Mr Hunt said: “If no action is taken to address this issue, then in theory, once this override finishes in March, 2026, we will have to find £216million in order to balance our books.”

The council is not alone in this – a combined deficit of £4billion is predicted nationwide.