Stark warning on spending from Devon finance chief

east devon

County Hall, Exeter - Credit: LDRS

Devon County Council is facing an 'unprecedented' black hole in its finances caused by the cost of living crisis and soaring demand for help for vulnerable children and adults, the authority's director of finance has warned.  

Angie Sinclair predicts the council could overspend by more than £40 million in the current financial year and says urgent action must be taken by every council department to rein in spending. 

 A panel of senior officers is already looking at options for councillors to consider, including spending cuts, remodelling services to save money and cancelling or delaying building projects. 

 Unlike central government, local councils are required by law to balance their books every year. 

 In a report to Devon's Cabinet, published today (Tuesday, July 5), Ms Sinclair said: "The council has never before faced a combination of demand growth and price shock pressures of this scale. 

 "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." 

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The leader of the Liberal Democrat group on the council Julian Brazil said the alarming warnings should serve as a wake-up call to the Tory-controlled authority.

He said: "This report is shocking. 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."

The report describes how children's services are forecasting an overspend of £17.9 million, because of a big increase in demand and the rising cost of placing children in care. 

 It includes a £7.7 million overspend in education, mainly from the cost of transporting children to school amid rising fuel and wages costs. 

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

 Ms Sinclair adds: "There is also a risk that inflationary pressures could result in costs, in addition to this overspend, of more than £10 million this year. 

"National pay negotiations are at a very early stage but indications are that increases to the National Living Wage coupled with the cost of living crisis will result in a higher than expected pay claim this year. The estimated cost of this has been included within the forecast overspend." 

Her report, which will go before Devon County Council’s Cabinet next Wednesday, July 13, concludes: "It is very early in the financial year and much will, of course, change as the year progresses. However immediate action must be taken to safeguard the financial stability of the authority."