By Local Democracy Reporter Trevor Bevins
DESPITE overspends Dorset Council is said to be in a better financial position than many local authorities.
The council’s auditor says the authority has done well to cope with its first year in business and the uncertainty the pandemic has caused, adding an extra £60million to its costs, just over half of which has been covered by government grants.
But there has been criticisms of the additional money needed to be put into both children’s and adult’s services – between them amounting to an extra £18million which had to be found to meet demand which was not anticipated at the start of the financial year.
Dorchester councillor Richard Biggs says that the under-estimating of what is actually needed for both services has continued year after year in the new council as it had in the previous Dorset County Council.
Similar criticism was made by Weymouth councillor, Green party group leader, Cllr Clare Sutton. She said while she understood that demand was not constant she could not work out why, year after year, the council started the financial year with a budget figure for both services and then had to come back and increase both by considerable amounts.
The auditor report had commented that there are still questions about whether children’s services offered value for money.
Executive director Aidan Dunn, who oversees the finance brief, admitted that the council had still not worked out exactly how best to guess future demand.
He said that the problem was that, literally overnight, the council might have to take a family of children into its care in unforeseen circumstances, which could instantly blow a £1million hole in the budget.
A recent Audit and Governance Committee heard that the council was expected to end its first financial year, 19/20, with total assets of £1.3billion and £28.2million in its general fund with another £86.2million in earmarked reserved.
Some of these reserves will have to be used to meet the additional costs of COVID that have not been met by government grants and the continuing, unknown, costs of the pandemic.
Said chief financial officer Jim McManus: “The continuing impact of coronavirus means that the future remains very challenging for us.”
But auditor Ian House, from Deloittes, said the council had managed to produce “a good set of account in difficult circumstances” and was likely to have the draft audit signed off in time at the end of this month.
“Compared to many other authorities we think you are in a reasonable position… there are still many council accounts not signed off across the country,” he added.
Cost of COVID crisis
Additional costs for Dorset Council to deal with the COVID crisis have been reduced to £27.5million.
The costs take into account a range of grants which have been given to the authority by the government. Without that support the additional unplanned spending would have been more than £60million.
Most of the extra funding is expected to be found from unallocated council reserve budgets which at the start of the financial year stood at £28million.
Councillors have been told that one of the current causes of concern is around the level of council tax and business rates which the authority fears may not be collectable because of people’s inability to pay.
This is currently put at a worst-case projection of £13million by the end of the financial year next April. Current levels of unpaid tax are said to be around £6million for council tax and £3million owed by businesses.
The council’s Audit and Governance Committee were told that, as the majority of courts remained closed, the council was largely unable to chase unpaid tax through the legal system.
Mr Dunn told the meeting that while the council was having a challenging time financially it was not in the arena which other councils found themselves in, of effectively declaring bankruptcy.
“But we will have to taken careful and cautious decisions if we want to continue to prevent that,” he said.
The meeting heard that, because of having to deal with the pandemic, the council had also not been able to make around £2million of on-going savings it had hoped to achieve through transforming its services. Other hoped for savings, proposed for future years, might also be in doubt.
Mr Dunn said that, on the plus side, there could yet be more funding to come from the government, including the possibility of help to assist rough sleepers during the winter months.
He said it was difficult to access the impact on the council from the current lockdown but said there would, inevitably, be consequences if it had to continue beyond the first week in December, or if further measures were needed later in the year.