Eastbourne council seeks ‘exceptional financial support’

Next Wednesday (February 7), cabinet members are set to consider a report setting out the authority’s budget proposals for 2024/25, ahead of a full council decision later the same month.

In an unusual step, the budget proposals ask the council to endorse four potential options, with the authority’s final course of action depending on the level of financial support it receives from the government.

According to the report, the council is requesting this additional financial support in light of a sharp rise in its homelessness costs, specifically the costs of providing temporary and emergency accommodation.

In the report, a council spokesperson said: “In Eastbourne Borough Council it has become increasingly apparent that the cost of homelessness and temporary accommodation placements is totally disproportionate to the level of funding the council would normally receive.

“An exceptional effort has already been made to reduce the number of placements at any one time for a peak in 23/24 of c370 to a level of c300.

“That means that in 2023/24 the equivalent of 49p in £1 of council tax collected for this authority is spent on temporary accommodation.”

According to the report, the council had initially expected to support around 150 households during 2023/24, but is currently working to reduce the number of homelessness presentations down from 500 to 300 by the end of the financial year.

In all, the council says this increased demand has led to a £4.364m overspend in 2023/24.

The report sets out how the council has been lobbying the Department of Levelling Up Housing and Communities (DLUHC) to ‘recognise the extreme pressures placed on councils by homelessness spending and agree to provide exceptional, emergency support to cover the costs of emergency and temporary accommodation’.

In other words, the council wants the government to fully cover the additional costs of temporary and emergency accommodation in 2023/24 and 2024/25.

Failing this, the council is asking the government to provide Exceptional Financial Support (EFS) totalling £6m. This would be made up of £3m to offset an overspend in the current financial year and a further £3m in 2024/25.

As part of its EFS request, the council is also asking for the ability to increase its council tax demand by 7.99 per cent in 2024/25, an increase it could not normally implement without holding a local referendum.

If its application for EFS is unsuccessful, the council says it will need to use a significant amount of its reserves instead.

This will likely bring the council’s general reserves below the minimum threshold of £2m. The council says it would then need to put in place immediate plans to reduce its spending on services by around £3m in 2024/25. This would be done in order to replenish its reserves to above minimum levels.

The council says it would still need to draw money from its reserves if its EFS application is successful (for a total of £1.716m), but would be able to avoid its reserves dropping below their minimum levels. It would also be able to put a some money back into reserves

The four options presented in the report reflect these outcomes: the government fully funding the additional temporary accommodation costs; the government providing EFS and allowing a 7.99 per cent council tax increase; the government providing EFS but not allowing the council tax increase; or the council receiving no EFS from government.

The council says the government fully funding emergency accommodation would be its preferred option, but acknowledges that this is ‘unlikely’.

Even with this level of support, the council would still seek to deliver the £3.8m of savings contained within its Stability and Growth Programme. The council says it expects to achieve a net savings figure of £1.9m in 2024/25.

The council would also increase its council tax demand in all four cases. If the government allows it, the 7.99 per cent increase would see a band D household pay £291.23 in 2024/25, an increase of £21.55 on the previous year.

The other options would result in a 2.99 per cent increase in council tax. This would see a band D household pay £277.74, an increase of £8.06 on the previous year.

The 7.99 per cent increase would translate to an extra £769,000 in Eastbourne Borough Council’s annual income, compared to £481,000 from the 2.99 per cent increase.

All four options also assume an increase in council house rents.

If the proposals are endorsed by cabinet members, they will be put to a full council vote later in the month. If they are agreed at that meeting, authority would be delegated to senior officers to carry out the option which reflects the amount of support provided by the government.