COST savings from changing to the new Dorset Council next year are becoming harder to achieve.

A report to the shadow council executive says there is not enough in reserves to meet the estimated £27million in ‘transformation costs’ while some other overheads are increasing.

But despite the difficulties councillors are being told that the project is still expected to make savings.

Financial modelling for the new authority is being projected on the assumption that the highest council tax possible can be levied and that each existing district or borough area will be paying exactly the same rate of council tax. At the moment each pays a different amount.

But that principle has yet to be agreed at both local and government level and takes no account of the likely cost, as yet unknown, of also setting up a new Weymouth Town Council.

Even in the best case scenario the first year budget for the new authority is expected to be at least £6million short.

Another £1.29million in expenses is now thought likely from disaggregation of the Dorset County Council budget, which would fall upon the new unitary Dorset Council unitary.

Transfer of pension and employment rights could add more than £7million in costs. A report to councillors next week (21/08) says: “This has highlighted the issue of ‘stranded’ costs and initial work has identified that these could be in excess of £7m. Work is currently being undertaken to identify solutions in order reduce the financial impact upon the council.”

But the new council is holding to the mantra that it can save £13.6million a year – mainly by running the same, or reduced services, with fewer people.

Shadow executive members are also being told that it would be wise to put at least £20million into reserves to deal with any emergencies and to add a contingency sum to the day to day budget.

The report admits: “The business case produced by Local Partnerships identified once-off costs associated with the convergence of the 6 Councils into one were in the region of £13.2m. This estimate will be reviewed in the light of the 2019/20 budget proposed. Some allowance for the convergence costs has been made within the sovereign council’s plans and the current level of uncommitted reserves would mean that this could be fully funded.

“In addition the Price Waterhouse Coopers (financial advisors) case for change identified that once-off costs of investing in transformation would be £18m to £27m. The initial analysis shows that there are not enough reserves to fully fund this. Consideration is therefore needed as to how the transformation programme could be funded.” The report also admits that to make the £13.6million in annual savings implementation costs could be £13.2million, which, together with other expenses could wipe out any savings in the first, and possibly the second, year. The biggest saving overall is by shedding staff – put at £10.1 million although the report admits that many of the lost jobs would not come in the first year, but in the second – and even then the council will do what it can to avoid paying redundancy: “A vacancy control process will be put in place. This will seek to ensure that the 12.5% natural reduction in posts that would otherwise be made redundant is achieved … It will also seek to mitigate any short term service needs that need to be addressed.”

Other savings thought likely will come from the reduction in councillors by more than 200 to 80 – saving £600,000 a year in allowances and expenses, but at the cost of having far fewer councillors per head of population.

An estimated £200,000 in savings is also thought possible by reducing the amount of properties the new council owns and runs – with between £8.5million and £12.5million coming into the new authority from property sales. However the experience of West Dorset District Council with the sale of its former headquarters in Dorchester may prompt critics to warn that ‘best case’ figures are often not achieved.

To make matters worse officers are also warning that financial support from the Government for 2019/20 is likely to result in a £11m reduction for the county.