Counting the cost of COVID-19 – County Council Cabinet to consider financial recovery plans to tackle coronavirus impact

A financial recovery package to help address the significant extra costs resulting from Hampshire County Council’s response to the Covid-19 pandemic, will be considered by members of the Authority’s Cabinet next week.

Jul 7 2020

At their meeting on 14 July, Cabinet will decide on the short-term steps needed to deal with almost £110 million of unplanned costs and losses this financial year. Since the start of the crisis, the County Council has been responding to challenges faced by care homes, caring for vulnerable children, supporting the local economy, and repositioning public-facing services. However, it has also lost significant income in areas such as school meals, country parks and outdoor centres, property services and registration services (births, deaths and marriages), and been forced to pause crucial savings programmes – adding to the overall financial pressures. 

Leader of Hampshire County Council, Councillor Keith Mans explained: “None of us could have predicted the scale and impact of this unprecedented situation. Now, as lockdown restrictions increasingly ease, we also have a crucial role in supporting Hampshire residents and businesses during a key period of stabilisation and recovery, to adapt their day-to-day behaviours, return to a healthy normal, and fire up the local economy again. Our early budget position for 2020/21 is based on a snapshot of an ever-evolving picture and will change as the longer-term consequences of Covid-19 are understood and Government guidance evolves around financial forecasting.  

“In Hampshire, we are fortunate that before the coronavirus hit, we were in a strong financial position – albeit following more than a decade of savings programmes from reductions in our Government funding. Our efficiency plans to 2021 and beyond were well on track, and we had sufficient reserves to help respond to the need for future savings. This firm foundation has enabled us to respond positively to the crisis so far - providing extra funding to social care providers, including the swift distribution of funds from Government to support independent care homes – much faster than most other local authorities. We are also now earmarking a further £4 million this year to boost the number of children’s social workers, and almost £6 million to support adult social care – two areas where the longer term impact of Covid-19 is expected to be felt most strongly. 

“However, we must now resume our efficiency programmes alongside our response to the coronavirus, and where Hampshire residents are embracing the ‘new normal’ borne out of lockdown restrictions, doing more online and accessing services digitally and remotely – this will undoubtedly feature more prominently in our savings plans for the future.

“We have sufficient cash flow to deal with the short-term impact of the pandemic as we wait to hear from central Government whether they will compensate councils for the extra costs and losses from Covid-19, and underwrite the anticipated lost income from council tax and business rates. In Hampshire, our medium and longer-term financial sustainability relies on this support – and we’re taking every opportunity to press home to Ministers the need for this critical help. 

“While we remain optimistic, we must make appropriate budget plans now, based on all circumstances. The report that Cabinet and then the full County Council will consider next week, will set out a ‘response package’ based on various scenarios, including one where we won’t receive any more Government funding – and options include the short-term use of reserves.

“We went into Covid-19 in a stronger position than many other local authorities. We have adapted well to the short term impacts of the pandemic, but it has become very clear that the Covid situation has exacerbated the need for long-running funding uncertainties to be addressed by central Government – a result of growing demand in social care for vulnerable children and adults, which is only expected to increase, post-pandemic.
“We welcome last week’s announcement by Government of some additional funding, and we await details of what this means for the County Council. However, what is already clear is that it falls well short of offering a sustainable solution to the financial crisis that we currently face.
“Local government across the country is about to enter the most uncertain economic and financial period since the end of World War II, and we are urging central Government to take action to safeguard our sector and services, and commit to a funding solution that recognises the crucial role of local government now, and well into the future."