Pandemic could cost Cambridgeshire councils more than £100million in total this financial year

Cambridgeshire’s councils have estimated the pandemic may cost them more than £100million collectively this financial year.

Part of the costs and losses incurred will be covered by central government, but concerns have been raised that support will not cover the full amount.

Returns purportedly sent to the Ministry of Housing, Communities and Local Government from around the end of June seen by the Local Democracy Reporting Service reveal the combined financial pressures on the seven Cambridgeshire councils.

They show end of year estimates for additional spending pressures, such as additional expenditure and savings foregone, which total £75million across all seven councils.

They also show lost income totalling around £34million, excluding potential losses from reduced council tax and business rates.

All councils have also received emergency extra funding to cover some of the costs and losses.

Overall the government has provided around £45million in extra funds for Cambridgeshire councils as part of a £3.2billion national fund to mitigate the pressures associated with Covid-19, with a further £7.8million for the county’s infection control fund, and an unspecified share of a further £500million to be shared out among England’s more than 340 local authorities in an as yet unspecified way.

The government has also said that where losses on sales, fees and charges income are more than five per cent of a council’s planned income, the government will cover them for 75p in every pound lost.

In each councils’ case the figures are a snapshot of a fast-moving situation, but they demonstrate the disruption caused to council budgets, which are tightly controlled to make sure they are balanced at the end of each year.

While calculating the total impact on councils’ finances is not necessarily as simple as subtracting the extra government support funds from additional costs and lost income, many Cambridgeshire councils are forecasting budget deficits this year owing to the pandemic and subsequent lockdown.

In the returns from around the end of June, Cambridgeshire County Council estimated a spending pressure of £44.7million, and lost income of £8.6million. The council has received extra funding of £26million from the national £3.2billion support fund.

But the impacts of Covid-19 have left the county council’s actual estimated deficit at £12.7million, according to the latest report for the council’s general purposes committee today (July 14), where councillors will discuss the financial situation.

This is because in the county council’s case it has received further additional funds relating to Covid-19 support, including an expected reimbursement from the NHS for procuring extra care beds during the height of the outbreak.

The county council documents show a “cautious estimate” for its share of the extra £500million announced at the beginning of July could be around £3million, which would still leave the council with a considerable shortfall of just under £10million.

Fenland District Council in its end of June returns has estimated a spending pressure of £2.3million, and lost income of £1.9million, and has received extra funding of £1million.

A spokesman for Fenland said: “In the wake of the Covid-19 pandemic, councils across the country have faced unprecedented pressures on their finances and Fenland District Council is no different.

“The council has mobilised its business continuity plan to ensure that there is minimal disruption to our services and we remain fully committed to the health and safety of both our employees and our communities.

“The Government has announced a further £500 million in financial assistance will be made available to local authorities to address spending pressures with additional compensation available in recognition of lost income. Where losses are more than 5 per cent of planned income from sales, fees and charges, the government will cover 75p of every £1. At this point in time our allocation of this financial assistance has not been determined.

“This announcement will also allow councils to account for council tax and business rates deficits over three years instead of one.

“We will be taking a budget update to our cabinet and full council in August when the situation should be clearer. Further pressures in regards to council tax and business rates are anticipated however we are currently waiting to see the full impact on our collection rates.”