Mid Devon Council predicts £1.4 million shortfall

Urgently trying to balance books

A shortfall of around £1.4 million is being forecast for Mid Devon District Council's next budget, as it urgently seeks to balance the books.

The total is just under 10 per cent of next year’s provisional general budget of £13 million. Unless savings can be found, the council will need to use some of its reserves to subsidise spending from April.

A report to the ruling cabinet warns: “Along with many local authorities, the financial challenges facing this council are immense.

“A difficult position with significant uncertainties surrounding future funding has been compounded by the need to maintain essential services whilst losing critical income streams.”

The report outlines how the projected shortfall has gone up – it was previously just over £1 million - because of factors including covid recovery being slower than anticipated, rising inflation and internal investments.

It also states how government grants, including covid-related funding which will no longer be provided, will be over £1.1 million less in 2022/23 than the current financial year, leaving the council exposed to continuing reductions in leisure and car parking income.

Council departments are now being tasked with finding potential savings totalling half a million pounds to help reduce the shortfall, with the report warning that otherwise it “may be forced to consider taking more from reserves and risks leaving the council in an imprudent position.”

It adds the recently announced one-year local government finance settlement would only mean a 0.82 per cent increase in ‘core spending power’ for Mid Devon, including a £5 increase in council tax, the maximum allowed.

However, due to inflation and lost income from covid, the report claims the settlement would actually amount to a “reduction in spending power” and that all councils needed “clarity and certainty about how all local services will be funded over the next few years and beyond.”

The cabinet agreed for the council’s policy development groups to make further savings suggestions before the full 2022/23 budget is considered next month.