West Devon council budget under pressure after Government funding shake-up

A rural Devon council is set to be around £750,000 short over the next three years after losing out in a fair funding review which favours urban areas.

Councillors were told at a meeting this week that the government’s review had been “anything but fair” for shire district councils such as West Devon Borough Council.

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Those were the words of head of finance (Section 151 officer) Lisa Buckle, who presented a balanced budget to the audit and governance committee on Tuesday for 2026/27, despite a reduction in government funding of 7.5 per cent over the next three years.

Urban councils, which include areas with higher levels of deprivation, have seen the largest increase in their core spending power, the money councils have available to spend on local services.

Mrs Buckle warned that the budget gap in 2027/28 would rise to more than half a million pounds, increasing to more than £1 million by 2028/29, when district councils are abolished and replaced by larger unitary authorities.

She said the council had hoped for an uplift in its core spending power after the government agreed, for the first time in a decade, to introduce multi-year funding settlements for local authorities rather than annual ones. 

However, she said this had not been the reality. 

Officers had put the case to ministers that rural areas also experience deprivation, but that it is harder to measure and that the cost of providing services is higher due to sparsity.

Mrs Buckle said any significant change to the council’s final financial settlement, due to be announced next month, was unlikely.

She told councillors: “The fair funding review has been anything but fair, as shire district councils have received the lowest levels of funding for the next three years. 

“We used to receive funding for the remoteness factor, but that has been taken away.”

The rural services delivery grant, worth £500,000 a year to the council, has also been discontinued, and there is no additional funding to reflect increases in the seasonal population.

The Section 151 officer said some of the losses had been offset in other ways, but that the council would still be around £250,000 a year worse off.

Net expenditure for the council in 2026/27 will be £9.8 million, and council tax will rise by the maximum permitted 2.99 per cent, equating to an increase of £8.05 a year for a Band D property.

This will be added to precepts set by parish councils and other elements of the council tax bill, including Devon County Council, the police and the fire service.

Members of the council’s audit and governance committee agreed the budget proposals, which include allocating £120,000 from the second homes council tax premium to a housing priority fund.

Garden waste charges are set to rise from £65 to £70 due to increasing contractor costs, amounting to a £30 increase in the service over recent years.

A report to the committee said the council had to consider some “difficult options” but had done so in a way that avoided impacting the delivery of core services.

All departments were asked to make savings.

Mrs Buckle said all district councils would need to hold prudent levels of reserves before being abolished, with responsibility for managing those reserves then passing to the new unitary authorities.

West Devon Borough Council will have just over £9 million in earmarked reserves and £1.9 million in unearmarked reserves at the end of the current financial year.

Total borrowing stands at £26 million.