Devon County Council has found £18.6m of in-year savings and additional income to reduce its overspend and inflation costs of more than £40m, which it says will “safeguard the financial sustainability of the authority”.
In July, the council forecasted that it could face an overspend of £35.6m in 2022/23 as a result of “huge financial pressures” caused by the pandemic and geopolitical situation. It also predicted that rising inflation could result in costs, in addition to this overspend, of more than £10m.
A new report by Angie Sinclair, director of finance and public value, outlined that the council now predicts an overspend of £17m as it has made significant savings through its Financial Sustainability Programme (FSP).
Sinclair said: “Immediate action is being taken to safeguard the financial sustainability of the authority.
“At month four, £18.6m of in-year savings and additional income has been identified and work is ongoing at pace to increase this figure and further reduce the forecast overspend.”
Work is ongoing to identify services and projects in both revenue and capital that can be transformed, modernised, remodelled, funded differently, ceased or postponed.
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Sustainability programme
The FSP was developed by the council in June to examine areas of expenditure and to develop proposals that directly address the in-year financial challenges.
The £18.6m of in-year savings and additional income was sourced from increased interest earned, delaying IT and digital infrastructure projects, scaling back on targeted funding and reducing spending on insurance contributions and emergency provision.
Sinclair added: “The formation of the Financial Sustainability Programme is having a positive, immediate and significant impact on the projected overspend.
“Work is ongoing to identify services and projects in both revenue and capital that can be transformed, modernised, remodelled, funded differently, ceased or postponed.”
The underlying position has worsened since month two and this must be addressed as a matter of urgency.
“Extraordinary additional costs”
However, Sinclair warned that the “underlying position has worsened since month two and this must be addressed as a matter of urgency”. This is a result of factors such as inflation, which are adding additional costs to the authority’s budget.
Cllr Phillip Twiss, cabinet member for finance, said: “Global price increases and spiralling inflation are having a major impact on our day-to-day services and infrastructure projects, and we are facing extraordinary additional costs at a time when budgets are already under strain. We are facing a winter of difficult decisions and tough choices.”
The authority has also projected an overspend of £34.5m this year relating to Special Educational Needs and Disabilities (SEND). This deficit is excluded from the updated total overspend, as the government has told authorities to put SEND overspends into separate ring-fenced accounts while it develops a new funding plan.
The report is to be discussed at a cabinet meeting on 26 September.
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