MID Devon District Council has acknowledged it might have to use some of its reserves to balance its budget next year.

Pressure is mounting on many of Devon’s councils as heightened uncertainty about the future of government cash for local authorities persists.

And that lack of clarity has prompted Mid Devon to state that it is “highly likely” it might need to use some of its reserves to make sure its finances are level in the 2026/27 financial year.

It may also review whether a minimum targeted balance of £2 million for the reserves linked to its general fund can be maintained.

Councils are required by law to set a balanced budget, but they are allowed to use any rainy-day cash they have saved up to help them do this.

Mid Devon’s cabinet will be told this week (Tuesday 4 November) that the council’s potential budget shortfall could be between £1.8 million all the way to £4.3 million for the next financial year, and that there could be an impact on some of its services.

Various factors could appease that, such as more generous government grants, potential savings by the council, or other avenues that could help it generate additional income.

Finance leaders at the council have gone through its expenses line by line and labelled potential saving opportunities as either green, amber or red.

The green ones are those that are deemed easier to achieve without having a significant impact on services, while red ones would tend to have a much bigger impact if they were agreed.

The council’s cabinet is being asked to keep the amber options available as a possible means of saving money once there is additional clarity around how much money the government plans to give to local councils.

Town halls across Devon often grumble that a decision about what cash Westminster wants to direct to local councils comes late in their budget-setting cycle.

But with the chancellor Rachel Reeves holding her Budget later than normal, that could delay the decision even further than normal.

Officers have said the budget outlook represents a “significant challenge” and so the “identification of further budget reductions is critical” to set a balanced budget next year.

“Whilst every effort will be made to identify efficiency savings, given the scale of the likely funding reductions it is unlikely that a sufficient level can be identified to fully balance the 2026/27 budget without significant implications on service provision,” a report prepared for the cabinet states.

“As members are aware, the Autumn Budget is now set for November 26, which means any settlement announcement is going to be later than previously advised which will result in the detail at local authority level potentially being announced later than anticipated.

“In addition to this challenge, changes in key senior ministerial positions are also likely to potentially build further uncertainty and delay into these announcements. This may require additional information being presented to members either late or outside of the standard committee papers process.”