£14.8m council overspend forecast

Herefordshire Council is projected to have spent almost £15m more than expected so far this year mostly due to the response to Covid-19, the latest figures show.

However, the data, which forms part of the second quarter budget and performance report to be presented to cabinet tomorrow, shows an improvement of £1.1m since the first quarter.

The outturn position forecasts a £14.8m overspend, £11m of this relates directly to the Covid-19 impact on both council spending and income.

The adults and communities is reporting a forecast overspend of £3.7m of which £3.6m is directly related to pressures from the pandemic.

This reflects a non-Covid-19 forecast overspend of £81,000 for the directorate as at quarter two.

Of the £3.6m Covid-19 pressure, £1.5m is estimated to form part of future NHS claims in this financial year, leaving £2.1m to be funded from the central government grants to the local authority.

A reduction in income has been seen across services in the economy and place director, together with increases in costs associated with responding to the pandemic.

The children and families directorate reflects the cost pressure in placements costs.

Also, the revenue budget includes the Covid-19 pressure of personal protective equipment and community support.

The Government has awarded grants to local authorities to manage the Covid-19 pressures, this is expected to cover around 70% of the pressure depending on the final spend.

However, there are ongoing discussions between government and Herefordshire Council.

The remaining pressures will be funded by the change in activity of the council in reducing costs and by reserves if needed.

As of the end September, claimants of council tax reduction have increased in 2020/21 from an expected working age caseload of 5,375 to 6,255.

This means that council tax income in 2020/21 is expected to decrease by £0.8m due to these extra discounts.

In terms of capital spending, the council is forecasting an underspend of £16.9m.

They expect to spend £72m of the £88.9m budgeted.

This forecast underspend consists of projects that are expected to cost less than the project budget, may no longer be needed or where there have been further delays in progress.

Covid-19 restrictions have had an impact upon several construction projects where work was suspended for some time.