Council prepares for potential government bailout

East Sussex County Council is preparing to bring in outside accounting firepower as it confronts a mounting fiscal crisis.

The local authority is considering commissioning the Chartered Institute of Public Finance and Accountancy (CIPFA) to conduct a £40,000 review as part of its efforts to stabilise its financial position — and possibly pave the way for a formal request for Exceptional Financial Support (EFS) from central government.

The council faces a forecasted deficit of over £37 million in 2026/27, with officers warning that financial risks have grown significantly amid national funding uncertainty and inflation-driven cost pressures.

Councillor Nick Bennett, lead member for resources and climate change, is due to decide on the proposal on Tuesday. The decision would authorise a CIPFA-led assurance review — a move that, while not yet tied to any official request for EFS, signals the seriousness of the situation.

In a statement, the council clarified its rationale:

“CIPFA have been approached to undertake their assurance review early, to provide the council with a report that will support the work that the council may need to undertake with MHCLG.

If EFS proves not to be required, or an option, the CIPFA review will provide external assurance as to the actions the council is taking to address the financial challenges the council faces.”

The backdrop is a growing trend of local authorities edging closer to financial tipping points. With changes to central government grant formulas on the horizon and inflation putting sustained pressure on social care and energy budgets, councils like East Sussex are increasingly exploring support routes previously seen as a last resort.

If pursued, Exceptional Financial Support would permit the council to borrow money for day-to-day spending — a departure from standard practice.

Under normal rules, councils can only borrow to fund long-term capital investments, such as infrastructure or assets. EFS, however, opens the door to borrowing for operational costs like salaries and services — a signal that core functions are under real strain.

The council’s own report notes that should the Ministry of Housing, Communities and Local Government be approached formally for EFS, a CIPFA review would likely be a necessary prerequisite.

CIPFA, for its part, has indicated that any assurance review would include drawing up an improvement plan in partnership with the authority. Council officers say the findings would also feed directly into the annual budget-setting process, potentially influencing future policy and funding decisions.

For now, East Sussex hasn’t formally committed to requesting government support. But with a £37m cliff edge on the horizon, the presence of CIPFA — and the £40k price tag attached — suggests the council is bracing for tough decisions ahead.