The local government funding crisis has led to Devon County Council’s (DCC) chief executive admitting that ‘the system is broken’.
At month six of the financial year, the authority is now projecting a £32million overspend for 2019/20 – up from £28.1million at month four.
This includes a Dedicated Schools Grant funding shortfall relating to Special Educational Needs and Disabilities (SEND) of £18.7million, up £2.9million.
Speaking at Wednesday’s cabinet meeting, Dr Phil Norrey, chief executive of DCC, said: “There is a recognition that the system is broken and we cannot go on as we are.”
In 2014, the Government changed the way in which the SEND system was funded, but Dr Norrey said: “This is a national issue and it is right at the top of the agenda, but, fundamentally, the Government has got it wrong.
“They have completely underestimated the cost of the reforms.
“There is a recognition it is neither fair nor sustainable for local authorities to have to bail it out from their general funds.
“There is a recognition that the system is broken and we cannot go on as we are. What that means in terms of huge policy developments, I don’t know.”
There is a recognition that the system is broken and we cannot go on as we are – DCC chief executive Dr Phil Norrey
A report by county treasurer Mary Davis stated that, at month six, the council is now projecting a £32million overspend, compared to the £28.1million at month four.
This includes planned contributions to reserves of £8million that are not expected to be made this financial year, and a funding shortfall relating to Special Educational Needs and Disabilities of £18.7million.
That figure is set to be held as a ‘negative reserve’ on the balance sheet, to be dealt with in future years.
DCC leader Councillor John Hart said that the figures speak for themselves, adding: “We are under pressure in a way we haven’t been before, but it is a physical demand from the public that is pushing this.
“The Government changed the rules and then didn’t fund the difference.
“We are doing what we can, but the demand is the issue, rather than how much money we have in the pot.
“The law says, if we don’t handle the demand, it goes to court and then costs us twice as much.”
Mrs Davis said: “Our overspending has increased.
“It is concerning, but not overly concerning. We still have six months to go and we have been in worse positions before, but do need to exercise caution.”
Opposition councillors raised concerns about the budget.
If the alarm bells weren’t ringing before, they are now – Cllr Alan Connett
Cllr Alan Connett, leader of the Liberal Democrat Group, said: “There are some things that are within the control of the council that the administration is not progressing with.
“£1.7million of the cross-council savings initiatives target of £1.9million are currently not expected to be met this year.
“You identified the savings and said they would need to be made to balance the books, and you are not achieving them.
“Demand is rising and government funding is falling.
“The council is waiting for a government, any government, to tell us what the funding for next year will be and that doesn’t help anyone plan, and we don’t know what a bad winter could bring us.
“If the alarm bells weren’t ringing before, they are now.”
Cllr Rob Hannaford, leader of the Labour Group, added: “This does feel a bit like crisis management, even if it is a medium level of crisis management.
“This is an ongoing trend and a serious trend, and clearly the phrase ‘we cannot go on like this’ has never been more true.”
He questioned whether future reports should refer to underfunding rather than overspends, as most of them are demand led pressures that the council has have little control over.
Cllr Hannaford added: “Whoever wins the election, we cannot keep underfunding local government.”
The cabinet agreed to note the report.