Dorset residents are expected to continue forking out for one of the highest council tax rates in the country – until the Government offers a better financial settlement.

Weymouth councillor David Gray claims that because of the financial problems, much of it caused by inflation, council staff are now spending too much time looking for savings, rather than delivering services.

He also warns that there could be more problems ahead over other mounting financial pressures – with a potential gap of £5m in an agreement with the Department of Education and diminishing cash reserves to fall back on as council 'rainy day' funds are eaten into.

Tuesday's Cabinet meeting heard for the first time that the council's capital spending programme is now considered 'unrealistic' and department heads are being told to go back to the drawing board, drop most of their plans, and come up with only one or two projects each which might be achievable by the next financial year.

The revenue budget for this year may also now need to be reconfigured with a supplementary budget possible in the coming months.

The same meeting was told that £6.5million more than anticipated had to be found to meet staff pay awards and extra payments had to be made to contractors to keep the school transport service running after some threatened to pull out unless their rising costs were met.

Councillors also heard that adult housing debt has now reached £8m with a proportion of that likely to be written off as not recoverable.

To make matters worse council tax payments owed by residents are at an all-time high for Dorset Council and ongoing problems with delays in the courts is slowing legal action to recover the debt, although more than £6.4m of arrears from the last year has been recovered.

Finance brief holder Cllr Gary Suttle says that trying to balance the books is becoming increasingly difficult although he is confident that the next three-month financial figures will be no worse than the £7.8m overspend currently being predicted for the end of the financial year in April 2203.

He describes the task as like having to achieve 10 pence with only 9 pence to do it with.

He said the heart of the problem was the Government's funding formula, which left Dorset underfunded compared to other areas, he commented: "Eighteen months ago I said we were £20million behind the curve but now, because of inflation and other factors, that has increased.

"Until there is a new funding formula (from the Government) we will continue to struggle."

Said Cllr Gray, who now sits as an independent councillor, said: "We are perpetually chasing the budget – or, at least, it does seem that way…

"Are our teams perpetually chasing cost savings rather than doing what they are supposed to be doing, delivering services?" he asked.