£8.5m covid shortfall could impact new unitaries start up balances

Northamptonshire's eight councils may have to deplete reserves to cover some covid expenses and losses

Wednesday, 26th August 2020, 3:42 pm
Updated Wednesday, 26th August 2020, 3:44 pm
There is a £8.5m backlog across Northamptonshire's councils.

Northamptonshire councils are facing a covid shortfall of £8.5 million which is likely to hit the start up balances of the two new unitary councils.

The eight councils which are in their final months before being replaced by the two new super councils in April, will most probably have to tap into their reserves to cover the lost income and increased costs put on their services by the effects of covid in the community.

Government has over the last few months given each authority funding to help meet covid costs – with NCC receiving the lion’s share at £35.m – but still there could be the multi-million pound shortfall.

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This could have a significant impact on the two new councils – whose reserves will be made up of pooling the current reserves in the county and then sharing between the two authorities.

A report to go to the North Northants shadow executive council on Thursday (Aug 27) sets out the current financial situation. Northampton Borough Council will have the biggest shortfall at £2.38 million followed closely by Kettering Council at £1.78 million.

Northamptonshire County Council is reporting a surplus of £172,000 of its government grant still remaining.

The report says: “There is a common theme amongst all of the district and borough authorities, with many of the pressures on additional costs and reduced income from similar services.

“Unfortunately, despite receiving government funding, there is still an overall shortfall forecast of approximately £8.567 million. The mitigations, to bring this overall variance down to £1.434 million, include an estimate of the amount to be received by each authority from a further MHCLG grant that covers up to 75 per cent of the loss of fees and charges (after authorities have covered the first 5 per cent) and draw down from general reserves.

Each authority will continue to lobby Government to fund these shortfalls as any use of available reserves will mean that each of the two new unitary authorities would have less funds available to invest.”