In a budget-busting leap from SAP to Oracle, West Sussex County Council is trebling its raid on capital assets such as buildings to fund its “transformational” ERP project.

The current budget for the authority’s long-running project is £27 million, more than ten times the £2.6 million originally budgeted when it started nearly seven years ago.

Last year, it was reported that the council was using money from selling off capital assets – including a former fire station – to fund the massively expanded budget. Although allowed by central government since 2016, the approach should not be used to relieve ongoing budget pressure, experts have warned.

In documents released to a council committee last week, officials said they expected use of funds from the sell-off to triple in the current financial year compared to a year earlier.

“Following a review of the 2025/26 plan, it is now currently projected that the council will use £12 million of this flexibility on qualifying transformation expenditure. However, the exact amount will not be known until the end of the financial year,” the report to the Performance and Finance Scrutiny Committee said.

In 2024/25, the council used £4 million in capital receipts to pay for its Oracle project, which it originally imagined would go live in March 2021. Officials expect the project to spend around £10 million in the 2026/27 financial year, with £4.3 million coming from capital receipts, and £5.6 million from one-off funding allocated to an IT infrastructure reserve.

An earlier estimate suggested the council might need to apply capital receipts of up to £20 million in 2025/26, with Oracle being “one major project likely to qualify.” The previous year saw £5.5 million set aside for the project from the unusual, one-off funding mechanism. Capital receipts are typically used to fund other capital projects such as schools and infrastructure rather than IT implementations and SaaS.

The council argues that selling property to fund an IT project, which would ordinarily be paid for using ongoing revenue, is justified because long-term savings are expected through “automation and enabling more tasks to be undertaken via self-service,” according to a council report from January last year.

Local council taxpayers will hope this is the case. However, the project has already confounded expectations. A report to the committee in 2024 said that in November 2019, the authority agreed a budget of £2.6 million, but later decided it needed more suppliers to help change business processes and reset the budget to £14.07 million, including £7 million in March 2021 and £7.07 million in October 2022.

In a separate report to the council last month, the project team said the current approved budget is £27 million, based on a program of up to three years from May 2024, with finance, procurement, HR, and payroll live by April 2026, including six months of post-implementation support.

However, the £27 million figure does not appear to include spending on the project before May 2024. Systems integrator DXC began working with the council on the project under a five-year, £4 million contract in May 2020. Auditors EY later said there were “weaknesses regarding budgeting, governance and risk management.”

In July 2023, the council found there was no real prospect of a deliverable plan being agreed. It terminated the agreement with DXC on 1 September 2023 despite the company winning a lucrative contract variation. Published data detailing council spending shows that throughout its period working with the council on the project, DXC was paid around £6.6 million, more than 50 percent above the original contract price.

In a statement, a spokesperson said:

“We generate capital receipts from the sale of assets and routinely sell assets that we no longer have an operational use for. West Sussex County Council has made a financial choice to use the receipts available to help fund the implementation of Oracle.

“The total estimated cost for the programme is approximately £41million. This is comprised of the initial £14.07 million spent during the earlier phases and the current approved budget of £27.048 million for the programme’s completion.”