Losses by 3Rivers are being met from reserves and other funds
Finance chiefs of a Devon council have managed an “astonishing achievement” in reducing the budget shortfall despite having to bail out its controversial housing firm to the tune of £3.7 million.
Mid Devon District Council has reduced its general budget shortfall to £90,000 from over £2.1 million for 2024/25 and says it will be able to refine it further, predicting it may not have to use its reserves.
Chair of the council scrutiny committee Cllr Rachel Gilmour (Lib Dem, Clare and Shuttern) said it could have been a very different picture in light of the 3Rivers situation - a housing company wholly owned by the council with sizeable losses which is being wound down.
“It’s an astonishing achievement from where it could be to where we are now,” she said. “Mentioning 3Rivers makes people’s haunches rise and our position could have been a lot worse.”
The company is said to have failed because of challenging trading conditions in the construction and housing sectors, increasing costs for materials and rising interest rates.
Losses of £3.7 million are being met by the council through reserves, a scheme called the 'new homes bonus' and various other funds.
Nearly a million pounds will come from the council’s housing revenue account to help buy St George's Court, a 3Rivers development in Tiverton, from which it will provide social housing.
The council plans to build a “significant number of new properties” over the next four years, but says a cumulative shortfall of £2.7 million will have to be addressed over that period as well as a £4 million shortfall in what it calls 'the general fund'.
Rising business rates and an increase in council tax have helped plug the shortfall for the next financial year.
But councillors expressed frustration at the government’s announcement of a 6.5 per cent increase in spending power for local authorities, with some labelling it as "spin".
They also said local authorities desperately need a multi-year funding agreement rather than the current year-to-year arrangement.
They said members and officers would need to identify ongoing savings to prevent the council relying on reserves.
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