Crisis leaves £12million hole in Northumberland County Council's finances

The local authority is currently predicting a £12million shortfall in its 2020-21 budget, over and above the additional £19.1million it has already received from the Government.

However, this figure ‘could be significantly higher if recovery from the Covid-19 crisis takes longer than current forecasts suggest or if there is a further spike in infections’.

In terms of meeting this shortfall, the authority is not intending to pass an emergency budget at this stage, as it ‘remains hopeful of additional financial support from Government in recognition of the considerable financial pressures Covid-19 has placed on all local authorities’.

The council will also maintain existing budget monitoring and control measures to minimise overspends wherever possible and can call upon non-recurrent reserves ‘as a means of last resort’.

As reported earlier this month, the authority’s level of reserves at March 31 this year was £248.75million.

It comes as a new report warns of the financial impact of coronavirus on county councils, which could run over several years, leaving England’s largest local authorities in an unsustainable position.

Commissioned by the County Councils Network (CCN), which represents England’s county local authorities, it shows that all 39 councils in the study – including Northumberland – could use up their available reserves by the 2021-22 financial year to cover a funding shortfall of £2.5billion.

Using data provided by the authorities on estimated cost pressures and lost income, alongside projections on future revenues (lost council tax and business rates) and legacy costs (continuing costs in adult social care), Grant Thornton UK LLP modelled the potential financial impact across three scenarios stretching to 2025.

The CCN says that the report provides robust evidence to the Government on the financial challenges facing local government as a result of the pandemic and that it wants to work with them to design a ‘comprehensive’ plan to prevent these forecast scenarios becoming a reality.

Coun Nick Oliver, cabinet member for corporate services at Northumberland County Council, said: “The coronavirus pandemic has required a wide-ranging crisis response from the council and we are on the front-line in supporting communities and providing essential services for our most vulnerable residents.

“We are continually and closely monitoring the impact of this on our financial situation and reviewing estimates and assumptions as the Covid-19 situation continues to evolve.

“We have already received two tranches of additional funding, totalling £19.1million, and remain hopeful of additional financial support from the Government, in recognition of the considerable financial pressures Covid-19 has placed on all councils.

“There is no doubt this crisis is challenging for all local authorities, but we remain positive that with the support of government, we can continue to protect front-line services and the Northumberland economy will emerge strongly.”

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