Covid-related care needs among pandemic costs that could hike Lancashire's deficit by over £100m
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Lancashire County Council’s cabinet heard that the disruption caused by the crisis to the usual process for assessing a patient’s needs upon leaving hospital “reduced the ability to move [them] to more appropriate care packages”.
That meant many went into residential placements that were intended to be temporary, but could – in some cases – now end up being permanent.
The issue was highlighted as one of several long-term effects of Covid-19 which could cause the authority’s deficit to balloon by £105m over the next three years.
The potential financial legacy left by the pandemic was laid out in a worst-case scenario put before a meeting of cabinet members, which would see the gap in County Hall’s accounts widen from £65m back in February to £170m by 2023/24.
The feared dent in the county council’s coffers could come from several areas – including a forecast £30m black hole in its expected share of council tax over the period, as a result of the possible hardship faced by residents whose own circumstances may be hit by the fallout from Covid-19.
Demand for adult services is expected to increase by almost £25m this year alone, because there is likely to be “pent up demand” in the form of increased physical frailty and mental health issues following the lockdown. Other expected financial pressures include a £5m increase in the cost of home to school transport to meet social distancing requirements.
The estimated coronavirus bill for County Hall during 2020/21 is £100m – £65m of which has so far been covered by three special grants handed out by the government to meet local authorities’ additional expenditure. £25m of the remaining £35m is gap is a result of lost income to the council, including from its school catering service.
The government has said that councils will have to absorb the first five percent of any income losses caused by coronavirus – and it will cover three quarters of the remainder, provided it meets specific criteria.
Deputy leader of the Labour opposition group, John Fillis, said that the short and long-term deficits faced by the authority were a “kick in the teeth for the people of Lancashire”.
“The government said they were going to cover all the costs of Covid – and then it turns out, no they’re not.
“Services will have to be cut and we’re already down to the bone as it is. The people of Lancashire are going to be the losers, because this government won’t keep its promises,” County Cllr Fillis said.
Conservative county council leader Geoff Driver has repeatedly lobbied the government to fully reimburse the authority’s coronavirus costs – and says he will continue to do so, while also pushing for a better deal for Lancashire as part of the government’s delayed “fair finding review” into local authority finances. However, he dismissed talk of cuts.
“We will sort out exactly what the government is going to give us and then we’ll carry on with our savings programme – because we have a long way to go in making the county council as efficient and effective as it can be.
“We’ll no doubt get flak, because too many people look upon reducing expenditure as reducing services – whereas if you’re providing a better service for a lower amount, it’s not a cut in service, it’s just a reduction in expenditure,” County Cllr Driver said.
The authority was already due to make £58m of budget reductions over the next three years and some of its in-year savings programmes have been delayed as a result of Covid-19.
The county council currently has £149m in reserves, but these would be wpied out by 2023/24 if they were solely relied upon to plug the potential post-pandemic gap in the finances.
Chief executive Angie Ridgwell told cabinet members that there were many “unknowns and uncertainties” about the authority's position – and noted that the overall £170m forecast deficit was based on receiving no further government help.
She said that an emergency budget would not be needed this year, but warned that the county council was clearly facing “significant financial pressures”.
“We will start work on identifying potential saving opportunities that we can consider if we don’t get a good settlement in the spending review,” Ms. Ridgwell added.
WHAT THE GOVERNMENT SAYS
Responding to the impact of coronavirus on Lancashire County Council’s finances, local government minister Simon Clarke said:
“We fully recognise the challenges councils are facing – that’s why we’re giving them unprecedented support during the pandemic with a £4.3 billion package, including £3.7 billion of unringfenced grants and the £600 million Infection Control Fund, to tackle spending pressures.
“Lancashire County Council has been allocated £64.9 million in additional Covid-19 funding, £16.20 million from the Infection Control Fund and received an increase of £57.6 million in its core spending power this financial year even before additional emergency funding was announced.
“They will also have access to a new government scheme that will compensate councils for irrecoverable income losses from sales, fees and charges,” Mr. Clarke added.
HOW LANCASHIRE’S £100m COVID BILL BREAKS DOWN
These are some of the estimated costs faced by Lancashire County Council this financial year alone as a result of coronavirus:
£24.5m – additional demand for adult social care services
£24.4m – lost income, including from school catering service and buses
£16.7m – emergency assistance payments to support adult social care providers
£10.2m – delayed savings plans
£6.2m – provision of personal protective equipment (PPE) and the building up of sufficient stocks in the event of a second wave
£5m – social distancing requirements for school transport services
£4.7m – additional demand for children’s social care services
£3m – additional workforce costs
Other costs – including the creation of a temporary mortuary at BAE Systems in Warton