Devon County Council has warned that its finances “continue to be under severe pressure” due to increasing service demand and the authority’s rising Special Educational Needs and Disabilities (SEND) deficit.
Phillip Twiss, Devon’s cabinet member for finance, has stressed that despite the council balancing its £630m budget for 2022/23, financial concerns remain.
Last summer, the authority faced a £30.5m overspend, with a further £10m risk identified relating to in-year inflationary pressures. However, the authority was able to make £25.4m of additional in-year savings as well as source income and alternative funding to plug the budget deficit.
Twiss said: “We’ve taken urgent action to cut our own costs and find savings and I want to pay tribute to all the officers and staff who have contributed to that process.
“It’s been a perfect storm of soaring inflation and unprecedented increases in demand on our services.
“We’re certainly not out of the woods yet. The economic and health legacy from the pandemic and the war in Ukraine have rocked the global economy. The effects are going to be felt for some time and our finances will continue to be under severe pressure.”
15th Annual LATIF & FDs’ Summit – 19 September 2023
250+ Delegates from Local Government & Investment
The high demand for Devon’s services was also highlighted in a 2022/23 Revenue and Capital Outturn report by Angie Sinclair, director of finance and public value.
She wrote: “Financial challenges continue, demand for services is higher than ever before, prices continue to rise and labour market shortages are still being experienced.
“This is being felt acutely within our adults and children’s services. This trend of rising demand pressure and rising prices is expected to continue into 2023/24, which will create a very challenging financial environment for the council going forward.”
We’re certainly not out of the woods yet. The economic and health legacy from the pandemic and the war in Ukraine have rocked the global economy. The effects are going to be felt for some time and our finances will continue to be under severe pressure. – Phillip Twiss, Devon’s cabinet member for finance.
Over £125m SEND deficit
The report outlined that Devon’s SEND budget continues to be “under significant pressure”, with the demand for Education Health Care Plans and SEND placements within the independent sector increasing.
It stated that Devon’s cumulative Dedicated Schools Grant deficit was £125.4m at the close of 2022/23, with it increasing by £38.9m in the financial year. This deficit was moved to the council’s usable reserves and into a ring-fenced adjustment account, in line with government policy.
However, Sinclair added: “It must not be forgotten that this arrangement is time limited and it is not clear what will happen after March 2026.”
Currently, local authorities can overspend their SEND budgets due to the statutory override granted by the Department for Levelling Up, Housing and Communities until March 2026.
The report also outlined that Devon’s earmarked reserves stood at just under £136m at the beginning of the financial year, but during the year these reserves have decreased by £28.4m to just below £107.6m.
It stated that the council’s reserves were used to support Devon’s revenue expenditure, invest to save expenditure and funding for various one-off projects.
This comes as in late May, Bristol City Council announced that the growing costs of its SEND budget was putting the authority at “huge financial risk” and potentially “bankruptcy”.
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Follow us on LinkedIn
Follow us here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
