Devon County Council faces overspend of over £40m

"Immediate action must be taken" to safeguard Devon County Council's finances, a senior officer has warned, with the authority facing a potential black hole of over £40 million this financial year.

In a stark report that will make uncomfortable reading at county hall, director of finance Angie Sinclair says every department must reduce spending to help balance the books, which is a legal requirement for councils.

The cost-of-living crisis and increasing demand for help for vulnerable children and adults has led to spiralling costs. Ms Sinclair says the council has "never before faced a combination of demand growth and price shock pressures of this scale."

A panel of senior officers is already looking at options for councillors to consider – work labelled a top priority. It could mean services are remodelled to save money and major building projects are delayed or cancelled.

In the report to Devon's Conservative-run administration, which will meet next week for the monthly cabinet meeting, Ms Sinclair says: "The pandemic and geopolitical situation has created huge financial pressures nationally and the county council is not immune from that.

"The current forecast is unprecedented and immediate action must be taken to safeguard the financial stability of the authority."

The report details the financial pressures facing the council. It predicts an overspend of £30.5 million and warns of a potential additional £10 million because of inflationary pressures.

Children's services are forecasting the highest individual overspend of £17.9 million with a big increase in demand and the rising cost of placing children in care.

It includes a £7.7 million overspend in education with the bulk of that taken up by transporting children to school because of spiralling fuel and wages.

Adult care services are also forecasting an overspend, of £6 million.

Ms Sinclair adds that "it is very early in the financial year and much will, of course, change as the year progresses," and how "Devon is not alone in dealing with these pressures."

Cabinet member for finance, Councillor Phil Twiss (Conservative, Feniton) said: "We're in the same position as every household in this country. We're not immune to the current cost of living crisis and the inflationary pressures stoked up by the pandemic and Putin's war on Ukraine, so we've got to tighten our belts.

"We are well known as a quietly efficient, well-run council but even we are now struggling to make ends meet and are staring at a large black hole in our budget.

"And with few useable reserves left in the bank to soften the blow we must start to consider action now to avert an even bigger problem later."

He added essential frontline services "have to be prioritised" and warned the legal obligation to balance the budget could lead to higher council tax rises next year – "something that many local people can ill afford."

"With inflation likely to rise even further and remain high for some time, we are likely to face a winter of difficult decisions and tough choices," Cllr Twiss said.

Opposition leader Councillor Julian Brazil (Lib Dem, Kingsbridge) slammed the report as "shocking".

He told the meeting: "If things continue as predicted, Devon County may well be insolvent by the end of the year.

"We all know times are tough, but how long is the administration going to support a government that is bringing this county to its knees.

"Once again it will be the most vulnerable who will suffer the most; both young and old. We have a government happy to give [millions of pounds] in tax breaks and grants to second home owners while the residents of Devon will suffer."

Cabinet will discuss the report next Wednesday [13 July].