DORSET Council has said there will be “difficult decisions ahead” as it reveals the financial impact of the coronavirus pandemic has reached £60million.
The government urged councils across the country to do “whatever it takes” to support residents and businesses through the pandemic, and has helped Dorset Council with two rounds of funding totalling £21million. But the impact of the COVID-19 outbreak on Dorset Council’s finances has been described as “very significant”, totalling £60million.
This is a result of additional spending to meet increased demand for social care for adults and children, extra PPE for employees, support for people who were shielding, etc. as well as lost income from the suspension of car parking charges, closure of leisure centres and other commercial services, and lower than anticipated income from business rates and council tax.
The government recently announced a third round of £500m funding for local government in England, but Dorset Council has not yet received the full detail of its share of this financial support.
It will consist of grant funding (Dorset Council will receive £2.7million), an income support scheme with details to be confirmed, and support for collection funds.
However, it is highly unlikely that this will fully address the current year’s budget gap which is now forecast at £43.1million.
The council’s current financial position will be considered by Cabinet on July 28, when they receive a Quarter One Financial Management Report.
Unless additional government funding becomes available, Dorset Council will have to manage this forecast budget gap using its reserves. The General Fund reserve of £28million combined with other previously earmarked reserves are sufficient to enable the council to continue to operate throughout 2020/21.
Cllr Tony Ferrari, portfolio holder for Finance, Commercial and Assets, said: “While Dorset Council has sufficient reserves to survive this financial year, our overall financial position as a result of COVID-19 is of real concern.
“It will be unsustainable to take this continued level of expenditure into the next financial year, 2021-22. However, we will continue to explain the financial reality of the situation to government and seek additional funding to reduce the impact.
“We will also need to enter into a really challenging budget setting round for next year and future years. This will identify tactical savings and will involve developing a transformation programme which enables the council to meet the needs of Dorset’s residents within the funding available.
“There are difficult decisions ahead.”
Dorset Council set a net budget of £304millon for the financial year 2020-21. This outlined projected income, expenditure and savings in balance to avoid any overspend by the end of the year.
The size and scale of the COVID-19 pandemic was not known at this point so was not budgeted for.
The financial outturn for last financial year, 2019-20, was a total overspend of just under £5million.
Dorset Council said that by combining the former district, borough and county councils into the new unitary authority had created significant budget savings and without these the financial position at year end would have been worse.