A council tax rise of 2.99 per cent has been approved by Devon County Council, with its Conservative leader warning that "austerity has not gone away."

The rise means the yearly bill for a band D property will go up by £45.18 to £1,556.46 from April. This excludes increases to other parts of the tax that fund district councils, police and the fire service.

It will help fund a spending increase of almost £50 million for the county council in next year's budget, most of which will be pumped into children's and adult services. Spending at county hall will therefore rise to around £629 million.

However, the council's finance chief warned the rise is not sufficient to cover increased costs due to service pressures and inflation, which add up to £87 million.

As a result, it will dip into reserves to the tune of around £23 million, while cuts and savings will be made totalling £30 million.

This includes reductions of over £7 million in care and support for older people and those with physical and learning disabilities. The budget book states: "Ultimately, the successful delivery of the budget will require a reduction to the care and support which people are currently receiving."

Although the county council tax increase is the lowest since 2015, it will place further pressure on household finances at a time they are being squeezed by the soaring price of energy, along with rising inflation and an increase in national insurance contributions from April.

Before approving the Tory budget, councillors rejected an amended one proposed by the opposition Liberal Democrats that would have seen more money spent on highways maintenance, mental health services, local community organisations and green initiatives.

Alternative Labour and Independent proposals were also defeated. As well as the Lib Dems, they wanted to retain the full £10,000 'locality' allowance that councillors can allocate to projects in their wards, which will drop to £8,000 next year.

Presenting his budget to a full meeting of the council held at Exeter University's Great Hall, leader John Hart (Conservative, Bickleigh & Wembury) said: "This is a very comprehensive budget, showing the largest increase in spending to support our most vulnerable residents that I can ever remember."

He thanked all of the county's residents and councils for their help during the pandemic, including those who have helped in the vaccination rollout, and reserved special praise for Devon's care workers.

But later in the meeting, when defending the proposal, he warned: "Austerity has not gone away. Covid has come, which has made an immense difference to everything.

"Rightly or wrongly, an awful lot of money has been spent keeping the economy going, keeping people in some form of income when they didn't have jobs and keeping, among other things, our care services and supporting it."

"We have gone through, and we are still going through, a change in this country that I've never really seen. Having said that, we as local government have got to balance our books. We don't have a money tree. Neither do we have the ability to borrow incessantly."

Cllr Hart continued: "Whatever way you want to look at this budget, it is tight but it does have an increase. It has an increase, ultimately, of about £48 million. Now we would love more, but there isn't any in the pot at the present moment. And even to get to that figure, we're taking £23 million out of reserves."

He added: "I am very concerned about next year, because money that we put in the balance sheet today has to be found for next year unless you cut even more services. The demand on our services by the vulnerable is going up, it's not going down. The money that it costs us is going up."

Following discussions, planned cuts to highways maintenance of £1.8 million have been reduced after it was agreed to put in an extra million pounds, while the council has scrapped a planned £329,000 reduction in community grant and crowdfunding schemes.

Cllr Hart reiterated the commitment made last week that a planned £200 charge for putting in disabled parking spaces outside people's houses wasn't going ahead, but that it had to stay in the budget agreed by councillors.

However, opposition leader Alan Connett (Lib Dem, Exminster & Haldon) questioned why the charge was still included and accused the cabinet member for finance, Phil Twiss, of not knowing what was in his own budget, referring to last week's meeting where Cllr Twiss said he didn't think there should be such a charge.

Cllr Connett queried how the budget could therefore be balanced when the parking bay charge, which was expected to bring in around £100,000 a year, wasn't going to happen.

Cllr Hart later responded: "I've already said to the very beginning of my speech today that [the charge] will not be implemented, but I'm not prepared at this stage to ask the county treasurer to rewrite the book and that is why it's still in there – the book has balanced."

In putting forward his amendments, Cllr Connett agreed it was a difficult budget and said that "Devon, once more, is being short-changed by the government."

"Abandoned by Boris, there is to be no party for the council taxpayers in this county.

"Re-prioritisation, elevated criteria for service provision are all the codewords for cuts in services which inevitably follow when government starve Devon of the funding it needs. Just look at the £130 million loss in rate support grant in recent years.

"The council tax is a rotten tax. It takes little account of the ability to pay, assumes that a large home equals readily available wealth and it is disproportionate," he said.

The Lib Dem leader pointed to how council tax was far cheaper in Westminster: "With the precepts from the districts, towns, parishes, fire and the police, households will be paying in excess of £2,000 a year here in Devon – £860-odd in Westminster."

He added his amendment "understands the pressures Devon is facing. Our proposals direct funds to key areas, making our roads safer, fixing those potholes, replacing white lines, improving cycling facilities and genuinely supporting communities which want 20 mile an hour limits.

"We put a much-needed extra one million pounds into the public health and mental health services, green initiatives to combat the challenges of climate change are supported with a new one million pounds fund."

Leader of the Labour group Councillor Rob Hannaford (Exwick & St Thomas) said it was "regrettable" the council was having to put up tax and criticised the government for not going the "extra mile" and giving it some extra money.

He was "pleased" the cabinet had U-turned on their plan to charge £200 for disabled spaces but "very disappointed" in the £2,000 cut to each councillor's locality budget.

"I think we've protected this all the way through the austerity period. It does provide local councillors with firm leadership in their communities.

"Quite often as county councillors, it's very frustrating. It can take a long time to get things done, but this has always provided us with a route in. Sometimes small grants can have big achievements in the local community."

His budget amendment included more money towards preventing domestic abuse and loneliness in older people, mental health training programmes for teachers, more funding for sustainable transport projects and measures to reduce speeding.

He also proposed more investment towards tackling Devon's housing crisis. "We know that we're not a housing authority," he said, "but what is also becoming very clear to all of us I think now is how the lack of affordable social housing or housing in general is impacting on our business operations.

p>"We cannot get teachers, teaching assistants, care workers and everything else that you would expect us to want to recruit. We've upped our terms and conditions for our children's social workers, but they now can't find anywhere to stay or live locally."

The amendments on behalf of the independents and Greens, put forward by Councillor Henry Gent (Green, Broadclyst), in the absence of independent leader Frank Biederman, were for "three modest proposals."

They were for more money for 20 mph zones throughout the county, scrapping the disabled parking charge that the council leader committed to axing to once the budget was passed, and to keep the councillor locality budgets at £10,000 each.

"It's not the more ambitious budget which we would be proposing if we had a Green government and Green and independent control of the council, where we would be going for much more ambitious carbon emission cuts in Devon and much more ambitious and generous care and services, Cllr Gent said.

"The unfair burden of council tax has been placed on Devon's council taxpayers by the government's austerity programme, which has ratcheted down their support for Devon by about 130 to 140 million since 2010, so that council taxpayers are paying for about 80 per cent of the budget compared to 60 per cent in 2010," he added.

The Conservative budget was approved by 35 votes to 12, with seven abstentions. One per cent of the council tax increase will go towards social care and 1.99 per cent towards general services.