Hertfordshire County Council predicts £17m overspend as result of Covid-19 pandemic

Hertfordshire County Council is predicting an overspend in excess of £17million, as a result of the Covid-19 pandemic.

Overall, estimates suggest the impact of the Covid-19 pandemic will cost the county council £70.2 million by the end of the 2020/21 financial year.

Central government has already allocated £54.5 million to the county council towards the costs of Covid-19, with some further funding expected to address loss of income.

And that – according to a report presented to a meeting of the county council resources and performance cabinet panel, that means – points to an expected shortfall of around £17million.

However that forecast, says the report to the cabinet panel, is still “extremely volatile with numerous uncertainties” and could “fluctuate by millions of pounds in a positive or negative direction”.

And at the meeting councillors were told there were hopes it could reduce to around £12million, should the council receive £6million from the government towards ‘loss of income’.

The council’s forecasts include the millions in additional expenditure already incurred to deliver essential services – as well as dedicated response projects – during the pandemic.

They also include forecasts of additional pandemic-related expenditure, loss of income and unachieved specific savings, that had been planned for this year.

They do also take account of ‘underspends’, including the furlough of music service employees, postage, business mileage and printing costs.

Overall the department expected to have incurred the greatest Covid-19 related costs by the end of the financial year is adult care services, where the total additional pressure is said to be £37.2million.

Most of these costs relate to the continued support for commissioned care providers, who can claim the additional costs associated with Covid-19.

The council’s figures do not include a forecast cost of £18.8million to support hospital discharges, which is expected to be fully funded by the CCG.

Nor do they include the expected fall in revenue from council tax and business rates – although this is expected to impact on the county council in 2021/22.

According to the report to the cabinet panel, which met on Thursday, October 1, the council intends to continue to lobby government for additional funding “to ensure the promise of funding all costs is incurred”.

But if no further funding is made available the financial losses forecast this year will be met from the council’s contingency budget and from reserves.

“Whilst use of reserves and contingency is always a last resort, prudent financial management in recent years means that the county council can respond to significant one-off financial pressures,” says the report to the cabinet panel.

“However the full extent of the financial pressures the pandemic will create is still uncertain.

“The level of contingency is not at the level needed to cover all reported pressures, and reserve balances are not inexhaustible and can only be utilised once.

“In Iine with the county council’s financial regulations, a request would be brought back to cabinet to approve any use of reserves.”