Devon County Council has issued a warning over its children’s services after running in to the red to the tune of millions of pounds.

The county council’s overall budget of £489m for the last financial year has left the county with an underspend of just £15,000.

But county treasurer Mary Davis is warning that children’s services continue to be subject to significant financial pressures.

In a report to the ruling cabinet, Mrs Davis said: “The outturn position for children’s services is a £2.6m overspend.

"For children’s social work and child protection, the overspend is £2.3m. The most significant areas of overspend are residential and supported accommodation placements and disabled children’s short-breaks’ services.

"These overspends have been mitigated to some extent through lower numbers of looked after children and vacancy management."

Mrs Davis said there was also an overspend of £260,000 on the education and learning general fund mainly due to increased costs in the personalised transport budget and higher numbers of children with special educational needs requiring personalised transport.

But she told councillors: "Despite significant pressures in children’s services, the authority has achieved a net underspend overall."

This has been achieved by underspending on adult care and health, highways, communities and environment, economy and corporate services.

Mrs Davis said after the council’s budget for 2017/18 was set with a substantial increase for adult social care, the Government also announced extra money for adult social care of which Devon’s share was £15m. Some of that has not been spent and is being carried forward into the current financial year.

Mrs Davis was recommending the Cabinet to transfer £12m into reserves to help protect against what she called a "significant financial risk" from changes in Government funding of local authorities.

"2019/20 is the last year of the current funding settlement from Government," she said.

"The council has no indication of the funding that it will receive from Government in 2020/21 and beyond.

"If history is repeated, the council may not know its level of funding for 2020/21 until late in the budget process for that year. 

"This poses a significant financial risk to the council and a reasonable level of reserves offers some protection against and softens the impact of a late, low settlement."

Mrs Davis said Devon’s reserves were the 12th lowest of 27 county councils in March 2017.

"The contribution to reserves of £12m is very welcome and will help to improve the authority’s financial resilience and help to bridge the gap projected in the Medium Term Financial Strategy for 2019/20," she says.

And she said: "Careful budget management has allowed the authority to contribute £12m to the Budget Management Reserve to offset funding shortfalls in future years and report an outturn surplus of £15,000."

Devon’s deputy leader and Cabinet member for finance, John Clatworthy, praised Mrs Davis and her staff for bringing the budget in on target.

“I think the man on the Clapham omnibus would say ‘well done’ to all concerned in these difficult financial times,” he said.

He echoed Mrs Davis’s warning on rising demand for services.

“Delivery is essential," he said. “We cannot control the demand for services  but we must control costs.”