East Devon District Council still faces a £1m budget gap as a result of the coronavirus pandemic – but its financial situation is far better than first feared.

Revenue streams for the council have improved sooner than was expected and a windfall sum of around £2.5m from additional business rate income in 2019/20 has become available.

The council's cabinet on Tuesday heard that the actual budget deficit they faced so far was around £4.5m, but Government grants and use of the furlough scheme would address £1.7m of that, and the expected to be announced 'lost income scheme' could see a further £1.7m provided.

Simon Davey, strategic lead for finance, told the meeting that while there was still a £1m deficit to find, the council had plenty of options to address it, and said: "We do have options to finance this gap and the deficit and to be reassured, it can be done."

A further report would come back to the cabinet in September with firmer figures and recommendations as to how the address the gap, but among the options Mr Davey outlined were using £800,000 of reserves, in-year budget savings around agency staff for streetscene and in the carbon reduction fund, New Homes Bonus funding, the £2.5m business rates income windfall, or use of existing earmarked reserves.

He added: "For the current year the Council will have a funding gap to find, the final sum will depend on how our income streams hold up during the remainder of the year, particularly in the summer months, any additional costs in terms of COVID-19 implications not factored in as yet and finally the details behind the Governments recent funding announcement.

"The picture is more favourable than first predicted and as can be seen that the council has options by year end to allocate funding or make savings to balance the 2020/21 financial year.

"Consideration needs to be given on the level of savings to address this year's deficit in terms of the balance to be struck between using one off monies or to make ongoing savings which would in turn help address future year deficits as they reduce our net budget going forward."

Councillor Jack Rowland, portfolio holder for finance, added: "Revenue streams have improved sooner than expected, and the £2.5m bonus from business rates could be used, but we would rather see that used for the medium term financial plan gap if we can."