CHILDREN'S and adult services at Dorset Council are responsible for most of the authority's £10.1million forecast overspend.

Figures produced for councillors show the service for children and young people expected to be overspent by £4.65million at the end of the financial year, amounting to 5.5% of the predicted council overspend – with adult services contributing 2.5% of the overspend, of £3.86 million.

Councillors are to be told that money is expected to be taken from reserves to make up shortfalls – with it becoming increasingly difficult to pay back into the 'rainy day' fund.

The risk to the authority has been officially rated as "high".

A financil out-turn report warns: "Unless some currently earmarked reserves can be repurposed, this could mean the Council is required to use its General Fund reserve, reducing the balance from 10% of General Fund to 5.71%. Depleting reserves at this rate in a single year would be a cause for real concern as the minimum operating level for the council to hold in it's general fund would be 5%."

Other risks identified for the council include Government-imposed changes to social care and education policy where the authority could find itself severely stretched.

Among the biggest risks is complex historic formula for education funding which is due to come to an end in March 2026.

If the Government wants re-payment it could add a cumulative deficit to the council budget of £88m – a figure which, by agreement, is currently not shown on the councils' balance sheets. With this Dedicated Schools Grant figure still growing it could reach a point where the council becomes technically insolvent, although so would almost every council in the country, making the move unlikely.

Councillors will be told that the authority is pinning its hopes for budget stability on the success on a £8.6million transformation programme which seeks to find more economical ways of working – which could involve streamlining some services, out-sourcing others, and possible redundancies.

Many of the council's services, especially social services for both adults and children, are 'demand led' making forecasting difficult. Similar problems face housing where there is currently a 4.2per cent forecast overspend – some of it driven by homelessness, although there have been successes in reducing the number of people being put up in bed and breakfast accommodation and in family placements.

Virtually the only council service performing well against set budgets is waste which is currently forecasting an underspend of £1million, mainly due to achieving better prices for some materials it recycles and the continued growth in the take up of garden and commercial waste services offered by the authority.