Northamptonshire County Council predicting massive £27m coronavirus blackhole

Northamptonshire County Council is predicting a £27m financial blackhole due to the coronavirus pandemic and says much more money will be needed from the Government to help bail it out.

The perilous position the virus has pushed the already cash-strapped authority into has been made clear in a report published this morning.

The authority says it has a £57.5m of pressures on this year’s finely tuned budget and will have a shortfall of between £14m and £27m. It says the ‘ongoing financial impact will be significant’ and has already had to take out a loan of £10m on top of £30m Government payouts given to it so far. The council’s financial collapse in 2018 has meant the authority does not have large reserves and will struggle to bear the financial impact in what is planned to be its final year before local government reorganisation in Northants.

Due to the pandemic the authority says it predicts it is going to have to spend an extra £17.6m on services, the majority of which will be in adult social care to pay for residential care for discharged hospital payment and also to pay for bulk orders of personal protective equipment. It also anticipates there will be increased costs in its children’s services department when the schools return because of an increase of referrals about vulnerable children.

It is predicting an income drop of £17.2m, largely from a decrease in council tax payments.

And it is having to underwrite market costs to suppliers, such as home transport providers and waste providers to the tune of £13.3m.

The report has made clear the government is going to need to pump in cash to local authorities for many years to come to help them recover from the crisis.

So far the council has received £30.6m from the Government as part of a £3.2bn national handout to help council’s cope with the increased costs of the pandemic.

The report says: “Looking to the medium term, the ongoing costs, especially in social care and the loss of council tax income, will create considerable financial pressure in future years that would need to be addressed by e.g. an ongoing funding increase. The funding response to Covid-19 cannot be seen as a one-off allocation of funds in the current financial year and be considered sufficient to address the issues and consequences for future years.”

The authority says it has enough funds to keep it going until the summer and is not in the position of missing a 114 notice yet. But it predicts the £9.7m of savings which had been hoped for this financial year will not be made due to social isolation measures and priorities of officers being focused elsewhere.

It says the financial predictions are just estimates and will become clearer when there is more clarity from Government about the lockdown length.

However while NCC has been frank with its finances, the financial impact across the county is unknown. Due to the unitary reorganisation the budgets of the borough and district councils and the county council are more entwined than ever before and millions of pounds are currently being spent on shutting down the councils and merging.

There are concerns the pandemic could have a major impact on the ability to set up the unitary councils. None of the borough councils in Northamptonshire have as yet issued a public financial report to show what position their finances are in.

The council report says: “The council is working closely with local partners to ensure that we have a holistic view of the situation. Local agreements have been reached with the health service in relation to social care costs and market underwriting, and we are working collaboratively with district and borough colleagues to make sure that the broader financial picture across the whole of Northamptonshire is understood and that intelligence is shared.”