ABOVE inflation council tax increases in Dorset for next year are likely unless the Government steps in to help Dorset Council with more grant funding - as it emerged the authority is currently facing a £40m budget overspend.

The Government has already given the council additional funding of £23.8m, but the extra cost to the council, in lost income and increased costs because of Covid 19, is likely to amount to more than £63million in total for this year financial year.

A council report warns that increased fees being paid for adult social care, alone, if they were to continue, would add an extra four per cent on residents’ annual council tax bills - already one of the highest in the country.

The predictions come as the council prepares for the ‘new normal’ which is likely to see many of its staff continue to work from home, more services provided online, fewer offices physically open and council meetings continuing to be held online.

It  is also likely to mean a scaling back on some services, increases in some fees and further council job losses as it re-starts its transformation programme which had been put on hold because of the pandemic.

The council’s audit scrutiny committee will hear on Wednesday that while the Government has offered some help over lost income, it is expected to exclude investment income, interest receivable and rents/lettings from properties.  The council believes that, unless things change, only £6m of the authority’s projected £14m losses from these areas might be recoverable.

There is also a danger that the council’s general reserves of £28m will need to be substantially eaten into and some ear-marked reserves switched to supporting the general budget.

A report to the summer cabinet meeting concluded: “The long term cost pressures faced by the council are of real concern.”

The authority’s financial experts says that a time limited increase of 10% for adult care has initially been paid for from funding allocated by Government. If this were to be continued beyond the crisis “the budget pressure would equate to a 4% increase on residents’ annual council tax bills alone.”

Dorset Council says that because of reorganisation it is in a stronger position that it would have been under the old system; is better able to respond to emergencies and can also achieve ‘economy of scale’ savings.

The report to councillors warns there is still a reliance on continued Westminster funding and uncertainty about what might happen next, adding: “The Government will undertake a spending review in the autumn which will be critical to providing financial certainty to all councils. The council will continue to meet its obligations but, like all councils in the country, is reliant on continued Government support.”

It is estimated that Covid 19 has already resulted in £28m lost income from council tax, business rates, car parking and other commercial income.

It has also incurred additional spending of £26m for adults and children’s social care, buying more care placements at a higher price, PPE, other preparations for excess deaths and staffing costs.

Because the council’s transformation programme had to be put on hold it estimates a further £6m in efficiencies has not been achieved.