Dorset Council is incurring additional costs of £13m per month as it supports Dorset’s residents, communities and businesses through the ongoing COVID-19 crisis.
When Dorset Council’s budget was set in February this year, a balanced budget of £304m was approved by councillors. In other words, the agreed budget 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.
Since March, Dorset Council has been responding to the COVID-19 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 COVID-19 on Dorset Council’s budget has been significant. It includes:
- 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. These savings can no longer be delivered due to employee redeployment to support our communities including shielded individuals.
If the crisis continues into the summer, the council is likely to incur additional costs of over £54m in 2020-21.
At the start of the COVID-19 outbreak in March, the government provided £1.6bn in additional funding to councils across England to help them tackle the crisis. Dorset Council’s share of this funding was £10.7m: this funding was spent in the first month of response.
Last weekend, the government announced a further £1.6bn of additional funding for councils. Dorset Council is still waiting to hear what its share of this funding will be. Finance officers hope the sum will be a similar amount again of around £10.7m.
However, this additional £21.4m funding from government for the COVID-19 response represents just 40% of the forecast additional costs of £54m, leaving a shortfall of £32.6m.
Dorset Council’s 2020-21 budget included reserves of £28m 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.”
I read this prompted by the update mentioning critical coverage that this release has received. I have not read that personally but the release above seems perfectly measured. My only hope is that the figures quoted do not turn out to be a significant understatement as I can easily see the impact of covid being worse than these figures suggest.
This report fails to mention a single area, where savings are being made. e.g less expenditure on school maintenance, play areas, libraries.
Council tax rose astronomically this year, well above the rate of inflation.and this looks like the prelude to another hefty rate rise next year.
We continue to maintain school buildings, libraries and play areas in preparation for them reopening.
Additional costs of £54mm mentioned but nothing on what the NET impact will be. Presume it will be substantially less as non-essential budgeted items are dropped in favour of new priorities. The major cost reductions must come from a re-evaluation of the council’s labour costs as the county is essentially shut down except for essential staff. Additionally, there must be a number of “nice to have” items in the budget which can be deferred (eg roadworks for now under-utilized roads) together with a rapid sale or sale and leaseback of the old (new structure) WDDC offices to generate much needed cash which would come in handy now. The picture may not be as bad if we were to receive a net figure rather than the inflated one.
Hi Paul – staff who are shielding or self isolating are being paid through contractual sick leave. All other employees are working either in their normal roles or redeployed to help with the Covid response. So there is not a reduction in ‘labour’ costs. We are continuing to maintain roads, verges, play areas and buildings to ensure safety of staff, children and the general public when we return to some normality. There is a asset management plan to reduce our buildings – but we have an obligation to get a decent price for any sales.