An increase in Government funding to local councils has been met with a muted response from Dorset Council.

Cllr Gary Suttle, Portfolio Holder for Finance, Commercial and Capital Strategy said the 6.5% uplift is as anticipated but: "Does not address the significant cost and demand pressures on our budget that we, like councils across the country, are facing at the moment.

"The settlement was broadly as we anticipated. Nevertheless, we have proposals for a robust, balanced budget which will be published in the first week of January," he said.

Dorset Council like all others is suffering from inflationary pressures on its capital and revenue costs, including wages.

It is now looks more likely that the authority will have to impose the maximum increase in council tax, possibly of 5per cent, for the coming year, a decision which it will make in February.

A recent council report predicted that, unless there are changes between now and April when the next financial year starts, the authority could end 2023/24 with a £12million shortfall and will not be able to achieve its capital programme with some projects being abandoned and others being pushed into the next financial year for the third year in a row.

In previous years the council has managed to reduce the financial projections made at the end of the third financial quarter by the end of the financial year although this year officers are warning that it has become increasingly difficult to achieve budgets set out at the start of the year.

Chief financial officer Aidan Dunn has warned councillors that there will be a need for vigilance over the budget and finding savings where possible, but has reassured councillors that the authority, which has healthy reserve funds, is a long way from the problems being faced by some authorities who have been forced to, effectively, declare themselves bankrupt and to then only provide essential services.

A recent council meeting approved the flexible use of up to £2million of capital receipts, something which only happens infrequently. The money has been ear-marked for transformation work, finding new and more efficient ways of running services with the aim of saving money in the longer term.

That decision led Weymouth councillor, David Gray, who closely follows the authority's financial standing, to comment that he doubted if the £2million would be enough and might have to be increased to the maximum of £5million.

Dorchester Lib Dem councillor, Richard Biggs, said he was uncomfortable with using capital receipts and urged tight control of any transformation projects to ensure they offered good value for money with the minimum spend possible on consultants and agency staff.

In October a report assessed the financial risks to Dorset Council's overall budget as "high".

Both of the council's highest costing services, for adults and children, are overspending: Both are demand-led and therefore difficult to accurately predict a year in advance.

Corporate director for finance and commercial activities Sean Cremer says that £225.5million, or 64per cent, of the council's service budget of £353.7m is spend by the adult and housing and children's directorates.

These areas, like others, have seen some inflation figures at record high levels, adding significantly to predicted costs, along with a rise in the number of older people needing complex an expensive care packages.