RISINGS costs are impacting on the ability of Dorset Council to deliver some services – with cost increases to the council in some areas going up by 50 to 60 per cent.

Dorchester Cllr Richard Biggs, vice chair of the audit and governance committee, said he found the situation “deeply worrying”.

He told a Monday meeting: “We have been warning on this committee for some time that inflation will be the number one risk…and it has come to be worse than we anticipated…

“We thought Covid was the worst but it’s turned out that other world events have surpassed that,” he said.

Committee chairman Matt Hall warned that inflation would “make or break” this year’s council budget.

He said that further sanctions on Russia, because of its invasion of Ukraine, would have an impact on council services at a moment’s notice if it hit oil or gas supplies.

Corporate finance director Jim McManus said the authority was facing continual financial challenges and “sustained inflationary pressures.”

The meeting was told that when the 2022-23 budget was set it allowed for pay inflation of 2.25%, fees and charges of 2.5%  and energy inflation of 5% - adding around £12m to the total budget for inflationary increases overall, with a contingency fund of £8.7m set aside to meet inflationary costs, and with another £33m tucked away in general contingency funds.

A series of council officers listed inflationary pressures in their areas which was already being experienced, many of them above the budget limits allowed for, with some contractors now said to be reluctant to tie into fixed-price contracts with the authority, because they could not predict their own future costs.

More than 50% of the council’s budget is used to buy external goods and services.

Said strategic finance manager Heather Lappin: “In most markets we are seeing high-level price upheavals,” pointing to rises in all areas of construction with added problems of fluctuating supply issues.

Many of the council’s contracts with suppliers are often fixed for a number of years, but usually allowed for an inflation uplift, some of which are linked to the Consumer Price Index, which was  currently producing figures of around 5%, but are expected to go higher.

Some of the existing contracts which were being re-procured are said to have already seen increases of 50 to 60 per cent overall.

Service manager for adults and housing, Sian White,  said the Government’s “care cap” of £86,000 on personal care during a lifetime would add to the council’s costs, although it was not yet known by how much, and would also require more staff input for assessment work.

In children’s services the council has heard of rises of between 2 and 15% from those who supplied residential care.

Corporate Development Executive Director Aidan Dunn,said there was a fine balance to reach with suppliers in managing contracts. He said there would be no point in being too tough if that meant the supplier going bust and they would try and work together to face inflationary problems in the months ahead.

He said the council was also likely to put more emphasis on providing services internally, rather than going out to the market, an example being the purchase of the former St Mary’s School site near Shaftesbury for children with additional needs.