New concerns over funding

27 Jul 2020 10:04
Published by: Scott Callan

Cheshire East Council has welcomed the latest round of Covid-19 funding from central government but has warned again that the funding is not sufficient to cover the forecast impacts of the pandemic.

The government has announced the allocation of a further £500m emergency funding for councils across England. 

Cheshire East’s allocation is £2.7m bringing the total amount of Covid-19 additional emergency funding for the borough to £22.4 million.

A report to the council’s audit and governance committee, which meets on July 30, sets out the current and forecast financial position in relation to the Covid-19 emergency.

The council originally forecast cost pressures on the council’s 2020/21 budget of £60m, this was later revised to £70m.

It says the cost pressures are the result of increased demand on council services, its response to the Covid-19 emergency and loss of income.

Current forecasts set out more than £42m in increased expenditure. 

Nearly a quarter of this relates to adult social care, with “significant increases” in other areas such as personal protective equipment, home to school transport and maintaining recycling and waste collections.

The pandemic has impacted on every area of the council’s business with increased expenditure incurred in services as diverse as homelessness, leisure, children’s social care and ICT.

Reduced income for services stepped down through lockdown is forecast to be around £14m, relating to services such as car parking, registration of births and marriages, cultural services, schools catering and planning.

A further £13.8m is forecast for loss of income from council tax and business rates.

The council has submitted regular reports to officials at the Ministry of Housing, Communities and Local Government (MHCLG) who require estimates of forecast impacts for 2020/21. 

This forecasting is subject to many factors, including the length of time lockdown measures are in place, the specific nature of lockdown measures, the speed of wider economic recovery and changes to legislation and guidance from government, including rules about how council services are delivered.  As these variables change, the council says its forecasts will inevitably change.

Forecasting has also been impacted by changes to the specific information requested by MHCLG.

Amanda Stott, cabinet member for finance, said: “We are continuously monitoring our spend and forecasts to fully understand the financial impact of our fight against Covid-19.

“Councils are not permitted to borrow to support revenue expenditure and it is illegal for an authority to set an unbalanced budget in any financial year. 

“It is therefore now crucial for us to analyse the latest government funding and the extent to which the easing of lockdown and social distancing criteria will reduce forecasts to understand when cuts could be required to council services.”

Sam Corcoran, leader of Cheshire East Council said: “The council has really stepped up to deliver for the people of Cheshire East during the pandemic.

“But we cannot ignore the fact that, in order to support people through this emergency, we have had to spend money that was not budgeted for at the start of the year. 

“We have received repeated assurances from government that councils will be fully compensated for costs incurred in the fight against Covid but we are yet to see the promise meet the forecasts.

“Cheshire East Council is not unique – councils across the country are facing the same challenges.”

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