Devon County Council’s parlous finances have come under scrutiny following warnings from the leader of South Hams District Council (SHDC) that it is facing bankruptcy.

Julian Brazil, the Lib-Dem head of SHDC, has said Devon County Council (DCC) will be facing a huge £160 million overspend by the end of the year, warning that it could be forced to declare bankruptcy by 2026 if it is unable to rein in spending.

The services most at risk include the Special Educational Needs and Disabilities for children (SEND) and adult social care in general.

The comments follow April’s governance review report, which found that SEND provision amid doubts about the Council’s ability to address these issues. In a damning indictment of DCC, it said: “The continuous failure of the council to improve the inadequate judgement by Ofsted of children's services over a 12-year period has resulted in the children's Minister issuing a revised statutory direction for social care, specifically citing failures of corporate governance and escalating to the appointment of a commissioner to oversee improvement and hold the council to account.”

It also highlighted staff fears at DCC, saying that many “are also being impacted” by food poverty issues.

At a recent full council budget meeting, Cllr Brazil reportedly told DCC’s Conservative Party leader John Hart that he was “like the captain of the Titanic” due to his alleged inaction.

Speaking to this paper, Cllr Brazil said: “We’re about to hit the iceberg. They have what they call ‘Operation Safety Valve’ where the government can bail them out or help them with it to some extent, and that was meant to be sorted out at the beginning of this year. But they rolled that back to March 2026 – the deadline when it needs to be sorted out.

“At the moment we are showing no signs of being able to control the budget - it’s growing.”

He dismissed Mr Hart’s argument that the council had faced unforeseen difficulties in the shape of the Covid lock-down and the cost-of-living crisis, caused by the war in Ukraine.

“If that’s the case then why isn’t every single council facing £160 million overspend in its own budget and about to go bankrupt? Some of them are going bankrupt and usually it’s because they have invested heavily in commercial property that’s gone belly up. Devon hasn’t got those excuses, it’s just poor financial management and the fact they’ve refused to accept they’re getting things wrong.

“March 2026 is red letter day. We could well go bankrupt at which point local government reorganisation will be forced upon Devon.”

Mr Hart dismissed fears of looming bankruptcy and told this paper that the council was already reducing its overspend.

“We’re as solid as any other local authority. We have an overspend with SEND but we have not yet taken any support from government,” he said.

However, he confirmed that DCC was currently in negotiations and “will get something before the end of the financial year”.

He added that DCC was looking to reduce its budget by £10 million to offset some of the overspend, adding that the aim was to reduce it to “basically zero” over the next three to four years.

He insisted no assets had been sold to reduce the debt. “We have sold in the region of £70 million worth over the last 10 years, but it is capital – it cannot be used for revenue. Property sales are nothing to do with the revenue account.”

He conceded there was “pressure” on both children and adult services but that they were not at risk, adding that there would be no cutbacks.

“I cannot foresee the time when we will be in that position,” he said.