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Essex County Council (ECC) has detailed its financial position as a result of expenditure and loss of income in relation to the Covid-19 pandemic.
Essex County Council has currently approved spending decisions totalling £74.5m which are directly related to the Covid-19 pandemic. The majority of decisions relate to additional Adult Social Care costs plus Excess Deaths management and reduced income across a wide range of services.
The report to Corporate Policy and Scrutiny Committee explains there are likely to be future cost pressures or potential income losses, for which the Council has not yet taken decisions, including supporting Operation Shield, additional children’s social care costs and anticipated under-achievement of savings plans where resource capacity has been redirected to focus on the pandemic.
These other pressures are estimated at £32.2m, which equates to a total value of £106.7m. The forecast position is before taking account of any underlying losses on council tax and business rates, which are critical to making decisions about spending commitments given they are key to ECC’s financial sustainability.
The Council is hugely appreciative that to date it has received £37.4m as its share of the first tranche of additional emergency funding from central government and is due to receive a further £26.2m from the second tranche, therefore a total of £63.6m. This leaves an estimated shortfall of £43.1m. ECC says it hopes to reduce that through working with Clinical Commissioning Groups (CCGs) to secure some of the national £1.3bn government funding provided to the NHS. However, it remains the issue that they have not yet got COVID funding from government to the level of our spending commitments – without future emergency funding we will need to make difficult decisions on how we prioritise our constrained resources.
Councillor David Finch, Leader of Essex County Council, said:
“This report sets out how we have responded to the Covid-19 Pandemic to ensure our residents are protected and supported. I am incredibly proud of the way we have reacted swiftly and decisively, and I thank all involved in these decisions.
“We have drawn down funding and used our reserves to divert money to the services that need financial support most, and where it can have the biggest impact. In the current climate is extremely challenging for any local authority to model the medium to long term financial impacts of the pandemic.
“The biggest unknown ahead is the impact on council tax and business rates which we rely on for more than 80% of our funding. Inevitably the impact on unemployment and the economy will have reverberations on tax nationally and locally. We look forward to working closely with government to find positive solutions to this problem whilst we recover Essex’s economy.”
Like all local authorities across the country, ECC is updating the Ministry for Housing, Communities & Local Government (MHCLG) on the financial impacts of the pandemic on a monthly basis and this is informing the Government’s decisions on any future emergency funding allocations.
Further to the impacts seen to date, there are key points to note on further financial risks. The current risk exposure could be an additional £128m when taking into account estimates for items such as:
- Personal Protective Equipment (PPE) given recent government guidance
- Adult Social Care Self-funders, should the requirements on local authorities be broadened
- Ongoing impact(s) across adults and children social care post the response phase (e.g. higher numbers remaining in residential beds, in the care system and accessing mental health support)
- NHS Emergency Period ceasing before ECC contractual arrangements, reducing funding availability
- Future waves of the pandemic increasing demand further
- Tax revenues being at considerable risk due to the number of new Universal Credit (UC) applicants nationally.