At their meeting on Tuesday 29 September, Cabinet will review the current picture, the result of significant unplanned additional costs during the outbreak, as well as lost income from areas such as school meals, country parks and registration services (births, deaths and marriages). Latest predictions put these extra costs and losses at around £160 million this financial year – with around £83 million of that unfunded.
The overall costs and losses rise to over £210 million over the next three years, and despite a potential financial response package having been agreed earlier this summer, a further £80 million of savings will still be needed in the budget by April 2023, in order to meet rising demand in services such as social care for vulnerable children and adults.
Leader of Hampshire County Council, Councillor Keith Mans explained: “The job of forecasting the financial impact of coronavirus is an immensely difficult task, not least because of the uncertainty caused from such a fast-moving, evolving pandemic. We continue to monitor the figures closely, and report them regularly to Government, while taking stock and making our own financial mitigations.
“Our exposure to Covid-19 is currently expected to cost us in the region of £83 million this year. Fortunately, Hampshire was in a strong financial position before coronavirus hit, thanks to our strong track record of careful and consistent budget planning alongside the prudent use of our reserves. As such, we have put plans in place so we can weather the storm this year, but a council smaller than Hampshire might not have been able to cope with such challenges.
“We have had some additional, welcome funding from Government in the form of grant and reimbursement of lost income, to support local authorities’ response to the crisis, and together with some additional savings secured across our departments, the financial liability of coronavirus for this year is slightly less than we predicted earlier this summer. However, moving into the medium term, the situation worsens as we also take stock of growing demand in adult social care which we expect to increase further as a result of the pandemic, further lost income and council tax revenue, and the costs of responding to any subsequent coronavirus outbreaks. It means that our total unfunded costs and losses rise to around £210 million over the next three years – with the need for at least £52 million from Government in order to remain financially viable in the future.
“We have remained steadfast in our representations to Government on the severity of this unprecedented situation and continue to stress the need for a sustainable funding solution to help us through the current financial crisis we face from coronavirus, and into the future – including opportunities that allow local authorities greater freedoms to charge for some services, and flexibility around setting council tax. I sincerely hope Government addresses these concerns in the next Comprehensive Spending Review, set to be announced later this year, and looking ahead to the next three financial years. This would deliver a much-needed step in the right direction towards providing local government with a more stable financial outlook for the years ahead, and safeguarding crucial local services to the people of Hampshire and beyond.”