Sarah Parker’s resignation as executive director of Dorset children’s services was announced eight hours after she was questioned by councillors about rising numbers of children in care and the cost of that.

Councillors on the audit and governance committee asked her why numbers in care had increased – and on what basis next year’s budget was being prepared.

Ms Parker, who joined the council at the end of January, will leave Dorset Council at the end of December to carry out other work outside Dorset.

In the short-term, children’s services will be led by Theresa Leavy, who will fill the statutory role of director of children’s services.

It has been stressed that Ms Parker made her decision to resign prior to the meeting and her decision was not related to the number of children in care or the cost of this.

The audit and governance committee meeting ended with chairman Matthew Hall saying that social services budgets should be set around need – rather than fixed at the start of the year and then try and tailor who could be helped to the amount available. His comments were seen as a criticism of the level the budget had been set at this year by the Conservative cabinet.

“Dorset Council needs to decide this service is a priority and finance it based on the needs and not wishful thinking and hopes…we have got to look as funding this properly so we can properly look after our children,” he said.

Children’s services are projected to currently be more than £8.5m short of the budget for looked after children at the end of the year –  which opposition councillors says is only a shortfall because the budget was set at unrealistically low levels, taking little account that the service is partially demand led and the council has no option but to respond to need, especially when safety is concerned.

Council leader Cllr Spencer Flower has consistently said that the authority is prepared to use its £28.5m in reserves, an amount which had been set deliberately high because of the uncertainties of the first year of a new authority. The council currently has 469 children in its care – a figure which is higher than comparable counties, but has been higher in the past. It has recently spiked after a period of decline.

Ms Parker’s Blueprint for Change exercise, to reorganise the county’s social services, aimed to stop children coming into care in the first place by offering parents and other carers more help and support at an early stage. The exercise is in the final phase with the changes due to be brought into place in the New Year.

Some changes, such as a new call centre, are already in place. A decision which Ms Parker said would save £300,000.

Weymouth councillor David Gray asked the executive director on Tuesday if lessons had been learned about forecasting budgets.

“Will next year’s budget forecasting be different. Do we have more intelligence, where is it captured? The number in care are not that different, but the amount we are spending is,” he said.

The executive director said that buying care was expensive because there was a national shortage of places and operators could name their price – many thousands of pounds a week for some vulnerable children, many of them adolescences. The county has no places for such children after the former Dorset County Council shut all but one of its homes.

She told the committee that the Blueprint for Change exercise would reduce numbers coming into care and make savings, but it was not an instant fix: “It’s like an oil tanker, it takes time to turn around,” she said.

She also spoke about the unpredictability of demand saying that a family of seven children had just come into the care of the council because they were judged to be at risk and the authority had no option but to protect them. She said, sadly, the children could not be accommodated together.

“These unique and less frequent decision can have a significant effect on our budgets, literally overnight,” she told the committee.