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Concern over financial future of Hampshire County Council as COVID-19 causes £21.6m shortfall

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Concern over financial future of Hampshire County Council as COVID-19 causes £21.6m shortfall

Published by Local Democracy Reporter Maria Zaccaro at 3:05pm 18th May 2020. (Updated at 3:21pm 18th May 2020)

Concerns have been raised over the financial future of Hampshire County Council amid fears that the impact of Covid-19 could be “disastrous”.

County bosses are calling on the government to underwrite all of the financial consequences of the coronavirus outbreak.

It comes as a report discussed by cabinet members at the county council revealed that by the end of June the local authority may have to foot a £96.2m bill.

The amount includes the estimated cost of the response to COVID-19 until the end of June as well as the savings the council had already planned to make.

According to the report, it is predicted that £74.6m will be met from existing budgets, a £54m government grant and savings.

But the remaining £21.6m will need to be met from reserves.

County bosses said it is clear that the financial pressure “is only going to get worse”.

The authority is indeed expecting increased demand in areas such as adult social care and children’s services and said it will have to take into account future recovery costs.

Opposition Councillor Alan Dowden has called on the government to step in.

Cllr Dowden said:

“I am very concerned. If the government will not underwrite all these losses I think the result will be disastrous.

"The government should fund what they are asking the county council to do because over the last years with austerity the county had to reduce the budget by £480m and with this Covid-19 it will just finish them.”

He said local authorities should be funded “properly” as they provide services residents rely on.

County council leader Keith Mans said the council had to take considerable action as the crisis has developed.

Cllr Mans added:

“Central Government grants will cover some of these additional costs, but we calculate that unfunded costs of £21.6m will have been incurred during the three months to the end of June, which will have a significant impact on the County Council’s financial sustainability going forward.

"The County Council is already undertaking a major efficiency programme to address a shortfall in the revenue budget of a further £80m by April 2021.

"Therefore, we will be continuing to lobby the Government to underwrite all of the financial consequences of the Covid-19 crisis.”

The Ministry of Housing, Communities and Local Government (MHCLG) has granted £3.2bn to councils to deal with the pandemic.

A spokesperson for MHCLG said:

“Hampshire County Council has received nearly £54 million of the £3.2 billion to deal with the pressures of coronavirus, while its core spending power rose by over £55 million this financial year even before additional emergency funding was announced.

"The Government will continue to work closely with councils as the pandemic progresses and tackle the pressures they have told us they’re facing.”