A NEW funding settlement which promises a fairer deal for Dorset has been given a cautious welcome.

Dorset County Council faced having to find £7.4m in savings on the 2016/17 budget because the Revenue Support Grant (RSG) – funding from central government – was slashed. This was on top of savings the authority had already identified of £13m.

But communities minister Greg Clark has now announced a new transitional grant worth £150m nationally over two years. It comes after lobbying by local authorities, including leader of Dorset County Council Robert Gould and chief executive Debbie Ward.

The settlement grants a £4.1m boost to Dorset in 2016/17, meaning that the £7.4m savings figure will drop to £3.3m.

West Dorset MP Oliver Letwin said: "I am delighted that we have achieved a reasonable settlement that will enable local authorities in Dorset to move forward and achieve the required efficiency savings over the next four years."

The settlement also promises a Fair Funding Review for South Dorset – the first for 10 years - on the grounds that demographic pressures have changed the demands on local councils.

South Dorset MP Richard Drax said: “I cautiously welcome the reprieve that this represents. Certainly, over the first two years, the settlement fills the £7m black hole that we have been so concerned about. And I am delighted that a Fair Funding Review will re-examine the basis upon which we are funded – demographic changes have meant that the cost of providing services, for the elderly for example, have soared.”

Why is government funding to local authorities changing?

 RSG is being scrapped over four years in an effort to transform the relationship between central and local government and make local authorities fund their services from revenue they raise, rather than being reliant on central government grants.

But when the resettlement was announced in December, Dorset County Council was told that it would lose RSG within two years instead of four – one of only two councils in the country to be in that position.

Communities secretary Greg Clark said the transitional grant will make it easier for local councils to move towards financial independence.

He added: “These are important times for local government. The devolution of power and resources from Whitehall is gathering momentum.

“The settlement means every council will have, for the financial year ahead, at least the resources allocated by the provisional settlement. In addition, we will provide transitional funding for the first two years of the Spending Review period for councils as they move from dependence on central government grants to greater financial autonomy.”