MID Devon District Council is set to balance its new budget by taking more than half-a-million pounds from its reserves.

Officers were forced to reconsider the district council’s financial plans at the end of last month after councillors rejected two sources of income needed to balance the 2023/24 budget – a legal requirement.

Mid Devon District Council had been expecting to earn interest from loans to its controversial housing development company, 3Rivers, but members rejected a new business plan for the firm, whose future is now in serious doubt.

It is also short of an additional £120,000 after members paused planned hikes to car parking charges following a public outcry.

Some charges, including annual allocated permits, were set to more than double.

To ensure the council is not projecting to spend more than it receives in income next year, councillors are now being asked to approve a “temporary reduction” of £610,000 from its current general fund reserve.

The move will take the reserve down to around £1.6 million, below the £2 million minimum level already agreed by councillors.

Mid Devon’s overall budgeted cost of services next year is £16.8 million.

Explaining the recommendation, council finance chief Andrew Jarrett’s report says: “Due to the extremely tight timetable to make these final budget adjustments, it is fundamentally impractical to offer any other budget solution except utilising our general fund balances/reserves."

It adds the council will therefore need to agree a plan “as to how and over what period it will be replenished back to the £2 million figure that was agreed.”

A cabinet meeting and emergency full council will consider the plan soon. Councils must legally set balanced budgets by Saturday, March 11.

Mid Devon District Council has already agreed to raise council tax by 2.99 per cent from April, equivalent to an extra £6.56 per year for a band D property.