Yesterday, the Dorset Echo ran a front-page story about the projected overspend of Dorset Council for this financial year. Cllr Tony Ferrari, portfolio holder for finance, commercial and assets at Dorset Council, sent a letter to the Echo, which explained the council’s financial position. Dorset Echo has not yet published this letter.
Here’s what he wrote:
“The recent headline Council Shake up was Meant to Save Money (Echo 30 Oct) gives the impression of a council not delivering on its priorities, a description far from the realities of what is taking place. Dorset Council is forecasting a £14.7m overspend by the end of the financial year. This is coming entirely from two areas of service, Adult and Children’s social care. Part of this is being driven by rising need in the community. It will come as no surprise to anyone that the number of people with dementia is rising sharply or that the numbers of children, in care and education, with complex needs are increasing. We have something over 400 more children in Dorset with individual support via a personal care plan than we had last year. We budgeted for increases, the need has grown faster than even we anticipated.
“Another part of our overspend is investment in the future to reduce the problems for the future. Recent commitments include a care village in Bridport to support Adults to allow for early discharge from hospital and ongoing support in their home. This is part of what we call our Building Better Lives programme and it is about Dorset increasing our capability to support those in our community with greatest need.
“Supporting individuals and preventing future need all costs money which has to come from somewhere.
“One of the arguments for forming Dorset Council was to save money and that is exactly what has happened. Can I look at some of the areas for savings. The first stage of the merger of the councils is complete, cutting the numbers of Directors and Councillors. We had 4 Chief Execs and we have taken that down to one. We had over 200 councillors, down to 82. What has been done to date saves us £5.2m per year. What we have taken longer to deliver is the merger of front-line staff who are delivering the services rather than the Senior Managers. We have taken time and effort to make sure that the staff are fully engaged. We must make sure Dorset has the right people in the right places to deliver what our residents need. This takes time. We will deliver another round of savings when this is completed, about the end of the year.
“We will make savings from our purchasing. Some of that is easy, when we had four contracts for the same thing we just have to transfer it all to the best contract, but this is a tiny proportion of what we buy. Almost all of our expenditure is on long term contracts, contracts to run care homes, residential places for children in care with extensive needs, vehicle leases etc. We will make savings on those too but we can only make the savings as the contracts end. It is almost never financially efficient to break a contract early to get a better deal. That means the savings will arrive over time as our contracts expire.
“We will also reduce our spend on buildings, but just because the Chief Exec’s office is empty it doesn’t mean the building can go, we will still be delivering service to our residents from the same building. Making sure we have the right people in the right buildings takes time. Even an empty building only delivers part of the savings. You may not need to heat it or light it anymore, but you don’t make all of the savings until something else is done with it. If we own the building it will take time to sell, if we lease it, we may need to find a new tenant. The savings here will be big and are actively underway. We have a disposal strategy that is targeted to deliver £31.5m by 2021.
“So, the council is rapidly delivering the savings that were planned as a result of the merger. But we have care needs today. One option would be to skimp on the service for our most needy residents, we won’t do that. We could delay on our investment plans to reduce future need and cost but this strikes us as a false economy which will cost us more in the long run.
“But we are over budget so how do we deal with this situation? The answer lies in the sound financial management of the councils that were merged to form Dorset Council. All of them were more prudent in their last year than had been forecast. As a result Dorset has reserves at the very top end of our target range. This is what reserves are for, spending to deal with short term issues. These reserves allow us to provide for our communities even when the numbers of individuals needing care rises rapidly and at the same time invest to slow this pressure in future.
“What is happening in Dorset Council is the same solid financial management that we saw from all of the previous councils. The savings from the formation of Dorset Council will comfortably exceed the current level of this year’s overspend and at the same time we are providing the care we need for rising resident demand.
“This is not a council in difficulties, this is a council doing exactly what Dorset’s residents would want from us, managing the tax payer’s money well in a difficult environment.”