All Cheshire East Covid costs paid by Government, says finance chief

Cheshire East’s entire Covid-related costs have been funded by the government to date and not the council, writes Belinda Ryan.

The revelation comes after the authority predicted the impact of the Covid pandemic would cost about £70 million and swallow up the council’s reserves.

Alex Thompson, the council’s director of finance and customer services, admitted to councillors: “As we stand at the moment, we haven’t taken any Covid costs to the council’s general fund, so, at the moment, we are funding everything through government expenditure.”

He did stress, though, that no one knew what the future held.

The £70 million estimate was surprisingly accurate, but the money has come from central government.

Cllr Janet Clowes, Conservative group leader on Cheshire East, said: “I know at one time there were some rather alarmist, justifiably alarmist probably, concerns around a potential £70 million overdraft by year’s end.

“And whilst I am in no way complacent, I think we do need to recognise that, for local authorities across the country, the way in which the government has met those Delta return [local government spending on covid related expenditure], requirements has been quite extraordinary.

“I don’t know of any other situation, probably not since the Second World War, where the government has actually taken such a direct response to the funding needs of the wider community.

“That doesn’t mean we can be complacent because Covid carries on.

“We know that the business grants will end towards the end of spring 2022, and …. have already identified in the assumptions that business rates are going to be an area of risk for us going forward.”

Mr Thompson replied: “We were trying to calculate how much it was going to cost Cheshire East Council and, at that point in time [April/May] the figure of £70m came up.

“Staggeringly, it’s been remarkably accurate, because in actual fact we know we’ve had roughly £30 million unring-fenced grants, we know out, of the ring-fenced stuff that we thought we were going to have to pay for locally, that roughly £30m of that has actually been dealt with through specific grants.

“And there has been some funding carried forward into the current year, probably about another £2m, which is pretty much the £70m that we sort of thought.

“We were right to flag that, at that point in time, the local authority was facing a huge bill that exceeded our level of reserves, and so that’s what made it so crucial to have those conversations with government.”