Councils call for clarity over emergency Coronavirus funds, as care costs grow by £1bn

The County Councils Network today urges the government to provide clarity on how much individual authorities will receive from the government’s latest £1.6bn of emergency funding, with analysis revealing that the Coronavirus is adding almost £1bn to care costs in counties.

Earlier this month, ministers announced the further tranche of emergency funding would be provided to councils to help fund higher service costs created by Coronavirus. The government is yet to announce how this funding will be distributed to councils, with fears growing that stretched social care budgets could receive less resources.

New analysis reveals that due to the outbreak of the Coronavirus, the 36 county and unitary authorities CCN represent initially estimate they will need to provide care and nursing home providers with an additional £322m to meet their escalating costs, with a further £259m needed to meet increased demand for services and to ensure that the NHS has sufficient spare beds for virus victims.

Councils are also planning to spend an additional £71m recruiting carers to meet demand, £144m has been spent on activity such as procuring personal protection equipment (PPE). Alongside this, an additional £138m has been allocated to support the most vulnerable children during the crisis.

Despite this, CCN fear the share of additional funding for social care could be lower than when the previous funding was announced at the beginning of April if the way funding is distributed is dramatically altered.

The network argues that in the short-term government must ensure that emergency funding is targeted at meeting additional costs in social care services, with government providing further funding and support to councils to meet shortfalls in lost council income.

CCN say that it is inevitable that councils will need a comprehensive multi-billion package of measures to meet their loss of income, with county authorities most exposed to a drop-in council tax revenue.

However, the network says that any short-term funding to cover lost income should be met outside the £1.6bn to ensure funding is not reduced for care services.

If the proportion of funding provided to authorities responsible for delivering social care services is reduced when allocations of the latest £1.6bn are announced, councils say they face unpalatable decisions to reduce support for life-saving care services and may be unable to meet higher care home fees being demanded by providers.

They also fear their capacity to assist in key areas such as ‘shielding’ the most vulnerable, care home testing, and meeting shortfalls in PPE supplies locally could be drastically reduced.

Overall, it is estimated that the 36 county and unitary authorities face £1.3bn of additional Coronavirus costs across all their services. This is on top of a pre-crisis funding black hole for those councils of £1.8bn that would have been needed to have been filled this year.

Local authorities face the potential loss of billions in lost income from council tax, business rates, fees and charges over the coming year. However, the true scale of these reductions is not currently known.

CCN has previously told ministers to that in order to prevent councils facing real financial difficulty, the government should underwrite any loss of income and provide short-term financial flexibility to councils, such as a relaxation of borrowing rules so councils can borrow to fund revenue spending and a suspension of section 114 requirements.

Cllr David Williams, chairman of the County Councils Network, said:

“The government has stated that the £1.6bn for councils, announced last week, has been provided to respond to the additional service costs faced by local authorities. It is clear from the evidence provided to ministers that social care is adding the most strain to council budgets as we battle the spread of the disease locally. 

“If the government changes the distribution of emergency funding it will disproportionately and unfairly impact those councils responsible for adult and children’s social care, reducing the funding available for these vital care services.

“It is inevitable that government will need to provide a comprehensive package of measures to compensate councils for billions in potential lost income. This will require additional resources, but this should be a targeted and tailored response outside of the £1.6bn allocation which is to address additional costs from the virus, and particularly those in life-saving care services and initiatives that will reduce the strain on the NHS.

“Alongside written confirmation that the government will meet additional costs and underwrite income losses, there are a number of other measures that ministers could bring forward to provide short-term financial flexibility, such as a relaxation of borrowing rules so councils can borrow to fund revenue spending and a suspension of section 114 requirements.”

Notes to editor

• The County Councils Network is the national voice for England’s county councils. It represents all 25 county councils and 11 county unitary authorities. Collectively, they represent 26 million people, or 47% of the country’s population. It is a special interest group of the Local Government Association. For more information, visit countycouncilsnetwork.org.uk.

• The COVID-19 cost pressure estimates for CCN member councils were taken from returns provided to the Ministry of Housing, Communities & Local Government (MHCLG).
• 34 of CCN’s 36 member councils (23 county councils and 11 unitary authorities) responded to the Government’s COVID-19 costs survey. CCN created an average across the different cost pressure lines for the two county councils who did not provide returns in order to provide an estimate for all 36 councils.
• As of April 2020, CCN member councils estimate a total additional service cost pressure of £1,339bn across all services as a result of COVID-19.
• Below is breakdown of estimated social care costs for 2020/21 as of April 2020.

• The pre-crisis existing funding gap estimate of £1.8bn is taken from CCN’s updated funding forecasts 2020/21-2024/25 which can be found here.