DORSET Council is incurring additional costs of £13million per month as it supports residents, communities and businesses through the ongoing COVID-19 crisis.
In February, the council set a budget of £304million for the coming financial year. This outlined projected income, expenditure and savings in balance to avoid any overspend by the end of the year.
But the size and scale of the COVID-19 pandemic was not known at this point so was not budgeted for.
Since March, Dorset Council has been responding to the pandemic as a category 1 responder under Civil Contingencies Act responsibilities. This includes a responsibility for planning and responding to the emergency with partners such as the NHS, police and fire service.
The financial impact of coronavirus on Dorset Council’s budget has been significant.
The impact has included the following:
- Additional unexpected expenditure on social care for adults and children, including a 10% increase in fees for care providers, renting and converting rooms in a hotel into a social care base, providing staff and care agencies with extra PPE, additional staffing costs, and preparations for potential excess deaths.
- Lost income from suspension of car parking charges, closure of leisure centres and other commercial services, and lower than anticipated income from business rates and council tax.
- Savings which were planned to be achieved through transformation projects, which can no longer be delivered due to employee redeployment to support communities including shielded individuals.
If the crisis continues into the summer, the council is likely to incur additional costs of over £54million in 2020-21.
At the start of the COVID-19 outbreak in March, the government provided £1.6billion in additional funding to councils across England to help them tackle the crisis. Dorset Council’s share of this funding was £10.7million and this funding was spent in the first month of response.
Last weekend, the government announced a further £1.6billion of additional funding for councils. Dorset Council is still waiting to hear what its share of this funding will be but finance officers hope the sum will be a similar amount again of about £10.7million.
However, this additional £21.4million funding from government for the COVID-19 response represents just 40% of the forecast additional costs of £54million, leaving a shortfall of £32.6million.
Dorset Council’s 2020-21 budget included reserves of £28million but even if all the council’s reserves were taken into account there is still a shortfall.
Cllr Tony Ferrari, portfolio holder for Finance, Commercial and Assets, said: “We are grateful to the government for the funding we have received to date.
“We feel that government ministers are listening to councils and responding to our concerns to ensure that the country’s COVID-19 response is as effective as possible. We are doing what the government has asked of us by supporting Dorset’s people and businesses through this crisis.
“The decision to form a unitary council in 2019 is proving to be the right one. Across the country councils have found it more difficult to manage the pandemic when there are two tiers of local government.
“Our own reorganisation meant that we entered this in a much more financially robust position than we would have been as a county council and five district and borough councils. Although our position is uncomfortable many councils are worse off than Dorset.
“We will continue to brief government ministers, civil servants and our local Dorset MPs on the council’s position.
“So far the government has done as the Chancellor promised, ‘whatever it takes’ to support the country. They do need to keep delivering on this promise.”