Cash crunch fears if council overhaul delayed

A Devon council has raised fears about rising deficits or even service cuts if the government delays its bid to overhaul local councils.

A demanding schedule has been set by Westminster to radically change how councils in 21 areas of England are constructed and how they provide their services.
That includes Devon, and looks set to mean the county’s 11 councils will be reduced to three or four, and the existing two-tier system of county and districts abolished in favour of a unitary style where a council runs all the services within its boundary.
But East Devon District Council has said that if the council overhaul process – officially named local government reorganisation (LGR) – is delayed, it could have a severe impact on the council.
In answers to questions from Councillor Mike Goodman (Conservative, Sidmouth Sidford), the council outlined what any delay in the shake-up would mean.
“If extended to 2028/29, we would need to find savings in the order of £4.5m requiring a significant reduction in service spending to be implemented for 2028/29,” Councillor Sam Hawkins (Independent, Cranbrook) the cabinet member for finance, stated.
He acknowledged this was a “high level” estimate, and that its medium-term financial plan would be further considered in July when “more certainty is likely on LGR”.
“This council has an excellent record of planning and meeting budgetary challenges, however, the changes to the government funding formula have had a significant effect on our finances to a degree not seen in recent years,” Cllr Hawkins added.
Cllr Goodman asked the council leader, Councillor Paul Arnott (Liberal Democrat, Coly Valley), why he had, in his position as deputy leader of Devon County Council, called for a delay to LGR given the potential financial impact on East Devon.
Cllr Arnott in his written response said: “On all prior evidence and experience of this process, even though it is becoming obvious that May 2027 is neither realistic nor in the interest of good local government in Devon, if there is to be a delay it will be left to the eleventh hour, perhaps in the autumn, to announce it.”
He added that if LGR was delayed, “it is likely that provision would be made”, suggesting funding support could be available from Westminster.
Cllr Arnott told the meeting that he wished for the government to allow LGR to happen in Devon through “evolution [rather than] forcing us through a timescale solely driven by Labour politics and nothing else”, highlighting that Devon’s councils already collaborated on some services and could do on more.
The squeeze on council funding due to government changes could have been more keenly felt in the upcoming financial year beginning in April had it not been for a quite-literal 11th hour mitigation by ministers.
Cllr Hawkins told East Devon’s full council meeting (Tuesday 25 February) that there had been a sudden prospect of the council being short of £1 million in business rates income due to a government change.
Details in the budget report show the government held firm on the shift but agreed a one-off grant just “a few hours before the financial settlement announcement in Parliament”.
That means the government is replacing the £1 million it had planned to reduce the council’s funding by in the upcoming financial year, but has made no such promise for the 2027/28 or 2028/29 financial years, which is where issues could arise if LGR is delayed and no further assistance is given.
The council agreed to increase East Devon’s share of the council tax – known as the precept – by the maximum 2.99 per cent allowable for the 2026/27 financial year – taking it to just under £177 for a Band D property.
That means an East Devon Band D property’s total council tax bill, which includes precepts from parish and town councils, the county council, Police and Crime Commissioner for Devon & Cornwall and the Devon & Somerset Fire & Rescue Service, will rise to £2,595.46 from £2,461.40 now – a hike of nearly 5.5 per cent.