Devon County Council is facing considerable financial challenges in the years ahead, the county treasurer declared today.
Mary Davis is warning councillors that there is a toxic mix of issues facing the council – not just the continuing effects of the pandemic.
She says pressures in social care and a big deficit in Devon’s special education budget as well as the Government’s spending review all pose big risks.
Mrs Davis was commenting on the authority’s financial outturn for 2020/21 which showed an underspending of £35,000 on the revenue budget of just over £541 million.
It is the 29th consecutive year that the county council has ended the financial year in the black.
But in a report to councillors, Mrs Davis says:
“The longer term financial impact of the pandemic, the spending review, one-year funding settlements from the Government together with ongoing pressures in social care and the funding shortfall in special educational needs and disabilities (SEND) mean the authority is facing considerable financial risk in both the short and medium term.”
Mrs Davis says the pandemic only increased the other financial pressures that Devon was already facing.
“The most significant of these have related to front line services’ ability to respond to demands they have faced during the pandemic while maintaining ‘business as usual’ services to the people of Devon,” she says.
Both children’s social care and adult commissioning and health faced overspends in the past financial year but these were offset by underspendings in other areas where activities were constrained by the lockdowns.
“In response to the COVID-19 outbreak, Devon County Council has directly received £99.4 million of additional (Government) funding of which £74.2 million has been spent and £25.2 million carried forward into 2021/22,” says Mrs Davis.
Mrs Davis will tell the county council’s Cabinet next Wednesday that the national pressures on spending on children with special educational needs and disabilities continue to be reflected in Devon.
“There continues to be increased demand on high needs,” she says.
“In particular, the growing demand on SEN placements within the independent sector is driving the pressure and is being reflected nationally in relation to high needs education placements.”
She says the deficit on the SEND budget is just under £49 million over the past two financial years.
The Government has told local authorities to allocate their deficits to a ring-fenced adjustment account.
But Mrs Davis warns: “This statutory requirement is in place for three years; what will happen to the balance after that time is unclear.”
Devon’s Cabinet member for finance, Phil Twiss, said:
“I want to thank Mary Davis and all her finance staff as well as all of our employees for their efforts over the past 15 months.
“Effectively, to balance our complex budget in the face of the pandemic and all the extra pressures that our services have faced is a remarkable job.
“It means we are well placed to help to lead the economic recovery that Devon so badly needs over the coming months and years as well as facing the financial challenges that Mary Davis outlines.”
The Cabinet will also hear next week that £133.8 million was spent on capital projects – £66.8 million less than budgeted.
Mrs Davis says that the pandemic had an impact on the delivery of the programme across all the county’s services and she is recommending that the balance is carried forward into future budgets.