Devon County Council’s projected overspend for this financial year has reduced after it found more savings and extra income.

However, the authority is still predicting a £6.3 million deficit which could increase further if inflationary pressures ‘cannot continue to be contained’.

In the summer Devon predicted a potential black hole of £30.5 million plus a potential £10 million because of inflation, with the cost-of-living crisis and increasing demand for help for vulnerable children and adults leading to spiralling costs,

It was accompanied with a warning that the council had ‘never before faced a combination of demand growth and price shock pressures of this scale’.

And while the ‘underlying’ overspend has remained fairly static since then – currently £32.8 million – this has been reduced by £26.5 million thanks to a ‘financial sustainability programme’ at County Hall.

Any overspend at the end of the financial year will have to be taken out of reserves as councils have to legally balance their books.

A report on the current month six position, presented to a meeting of the council’s Conservative-run cabinet on Wednesday said: ‘The cost-of-living crisis and geopolitical situation has created huge financial pressures nationally and the county council is not immune from that.

‘Immediate action has been taken to safeguard the financial sustainability of the authority for the current financial and work continues to identify further in year cost containment measures.’

The updated total does not include a separate, projected £37 million overspend this year on caring for children with special educational needs and disabilities (SEND) as the government has told councils to put these overspends into separate ring-fenced accounts for three years.

But the arrangement ends in April and Devon is still in the dark about what will happen when the ring-fencing arrangement ends. Its current SEND overspend – effectively debt – is £124 million.

The council says it continues to await the outcome of a ‘safety valve intervention’ programme with the Department for Education, which could involve money to help plug the financial black hole along with reforms to the system.

Director of finance Angie Sinclair concludes in the report: ‘The improved position is welcomed but the good work to date must continue to ensure a balanced position is delivered at year end.

‘The financial sustainability programme continues to have a positive impact on the projected overspend. However, the underlying position continues to be hugely concerning due to the impact on future year’s budgets.’

A government spokesperson recently said: ‘We have made an additional £3.7 billion available to councils this year in recognition of their vital role. This includes an additional £40 million for Devon County Council to ensure they are able to deliver key services.’