'The system is broken': Devon County Council facing huge budget shortfall

PUBLISHED: 16:37 15 November 2019 | UPDATED: 17:40 15 November 2019

The meeting at Devon County Hall heard the 'system was broken' with a £32million overspend.

The meeting at Devon County Hall heard the 'system was broken' with a £32million overspend.

Archant

The local government funding crisis has led to Devon County Council's boss admitting that 'the system is broken'.

At month six in the financial year, the council is now projecting a £32m overspend for 2019/20 - up from £28.1m at month four.

The overspend includes a schools grant funding shortfall relating to special educational needs and disabilities (SEND) of £18.7m, up £2.9m from the month four position.

Speaking at Wednesday's cabinet meeting (November 13), Dr Phil Norrey, the council's chief executive, said: "There is a recognition that the system is broken and we cannot go on as we are."

In 2014, the Government changed the way in which the SEND system was funded, but Dr Norrey said: "This is a national issue and it is right at the top of the agenda, but fundamentally the government has got it wrong.

"They have completely underestimated the cost of the reforms. There is a recognition it is neither fair nor sustainable for local authorities to have to bail it out from their general funds."

The report of Mary Davis, the county treasurer, said at month six, the council is now projecting a £32m overspend, compared to the £28.1m at month four.

This includes planned contributions to reserves of £8m expected to be withheld this financial year, and a funding shortfall relating to SEND of £18.7m.

That figure is set to be held as a 'negative reserve' on the balance sheet to be dealt with in future years.

Councillor John Hart, leader of the Conservative-led council, said: "We are under pressure in a way we haven't been before, but it is a physical demand from the public that is pushing this. The government changed the rules and then didn't fund the difference.

"We are doing what we can but the demand is the issue, rather than how much money we have in the pot. The law says if we don't handle the demand, it goes to court and then costs us twice as much."

Mrs Davis added: "Our overspending has increased. It is concerning but not overly concerning. We still have six months to go and we have been in worse positions before, but do need to exercise caution."

But opposition councillors raised concerns about the budget overspends, saying it meant the alarm bells should be ringing.

Cllr Alan Connett, leader of the Liberal Democrat group, said: "There are some things that are within the control of the council that the administration is not progressing with. £1.7m of the cross-council savings initiatives target of £1.9m are currently not expected to be met this year.

"You identified the savings and said they would need to be made to balance the books, and you are not achieving them."

Cllr Rob Hannaford, leader of the Labour Group, added: "Whoever wins the election, we cannot keep underfunding local government."

The cabinet agreed to note the report.

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