Urgent work to head off our cost of living overspend has already identified nearly £19 million of extra income and savings.
Senior officials from every council department have been working over the summer to identify savings following a warning from director of finance Angie Sinclair that the authority was facing an unprecedented black hole in its finances caused by the cost of living crisis and spiralling demand for help for vulnerable children and adults.
Ms Sinclair predicted the council could overspend by more than £40 million in the current financial year, which included £10 million of extra costs from soaring inflation.
Our ruling Cabinet ordered urgent action and a panel of senior officers was set up to look at options for councillors to consider including spending cuts, remodelling services to save money and cancelling or delaying building projects.
Now – in a new report published today – Ms Sinclair says that £18.6 million in savings and extra income has been identified by the financial sustainability task force.
Her report, on the first four months of the financial year, says:
“As discussed in the month two report, the pandemic and geopolitical situation has created huge financial pressures nationally and the county council is not immune.
“Immediate action is being taken to safeguard the financial sustainability of the authority. Work is ongoing to identify services and projects in both revenue and capital that can be transformed, modernised, remodelled, funded differently, ceased or postponed.
“£18.6 million 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.”
Ms Sinclair highlights the continuing pressure on children’s services from cost pressures and rising demand with a £12.1 million overspend still predicted on placements for disabled children and independent residential care services.
Bus companies giving up contracts for school transport mean services have to be re-tendered at additional cost and this is the main contributor to a £5.9 million overspend in education services, she says.
The £18.6 million identified so far includes income from rising interest rates, delaying some in-house IT projects, reducing spending on insurance contributions and emergency provision and scaling back some targeted funding.
Ms Sinclair will tell the Cabinet next Wednesday:
“The formation of the Financial Sustainability Programme is having a positive, immediate and significant impact on the projected overspend. However, the underlying position has worsened since month two and this must be addressed as a matter of urgency.
“The good work underway must continue at pace and scale to ensure the authority is in the strongest position possible to continue to provide the best services we can within the resources available.”
Cabinet member for finance, Cllr Phil Twiss, said:
“We’re in the same position as every household in this country. We’re not immune to the cost of living crisis and the inflationary pressures stoked up by the pandemic and Putin’s war on Ukraine. So we’ve got to tighten our belts.
“We asked our officers to identify areas where we could save money and boost income and they’ve been working hard over the summer to come up with these options but there is still a great deal of work to be done. But by beginning to tackle the problem early in this financial year, we’re giving ourselves more room for manoeuvre
“Unlike central government, we have a legal obligation to balance our budget every year so we have very little scope for meeting these pressures without cutting services, cancelling or delaying major infrastructure projects or proposing even higher council tax rises next year. And that’s something that people can ill afford.
“Our essential frontline services have to be prioritised and we must try to continue to support the local economy to help Devon bounce back from the pandemic.
“But 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.”