Pandemic leaves North Yorkshire County Council with £42m black hole

North Yorkshire County Council's leaders said despite the size of the deficit it was facing, they hoped to be able to avoid bankruptcy, even if the government did not provide more than the £26m it already has given the authority to respond to the outbreak.

The Yorkshire Post revealed last month that many of the region's town hall leaders could be forced to effectively declare themselves bankrupt this autumn because of the devastating toll the coronavirus pandemic is taking on their finances.

The gravity of North Yorkshire's financial position emerged after its chief executive Richard Flinton said recent days had seen the number of positive Coronavirus tests fall to single figures or no new cases and the number of Covid-19 patients in hospital serving North Yorkshire fall from a peak of more than 300 to 100.

The council said while the county's two peaks of Coronavirus cases passed on April 9 and April 30, its test and trace programme had started dealing with small-scale outbreaks and the authority was "planning for the potential of a further spike".

An estimated 243 people have died from the virus in hospitals serving North Yorkshire and a further 183 people have died in the county's care homes, but it remains unclear how many people have died in their own homes.

The county has seen over 1,300 positive cases of Covid-19 and many more which have not been formally identified, but North Yorkshire has suffered slightly less than the national average of cases per 100,000 population.

Mr Flinton said the authority expected to have spent £42m fighting Coronavirus by the end of the year, but the disease had also halted many of the council's cash generating streams, meaning it had lost about £10m of income.

In addition, at the peak of the crisis, the council spent £250,000 a week on personal protection equipment for hundreds of its staff on frontline roles, such as helping increase capacity at hospitals and providing daily support to the 3,000 residents most vulnerable to the virus as well as thousands of other people shielding themselves.

Mr Flinton said it had been forecast that the impact of Covid-19 on North Yorkshire residents, such as the rise in unemployment, would lead to a further £24m fall in future funding, including less council tax.

He said while the total potential cost of the pandemic to the authority was £76m, the government had given the council £26m to manage the outbreak. However, the council is hoping to recover £7.7m from clinical commissioning groups for extra adult social care costs in recent months.

Mr Flinton said the council would take measures to protect its financial position and called on the government to help with its future income, particularly council tax.

He added: "It has been an event that has had a tremendous impact on the county. We are hopeful that the government will recognise the need for further funding."

The authority's leader, Councillor Carl Les said as County Council Network lead member for finance he had written to Chancellor Rishi Sunak this week over deficit.

He added: "The government is listening to us. The business community has been well protected by Rishi so far, but the county councils and other councils also need that level of support."

The council's finance boss Councillor Gareth Dadd said should no more government funding not be forthcoming, the council hoped to avoid serving bankruptcy notices by being "very careful over possible investments" and using reserves it had set aside for the final stage of austerity.

The Yorkshire Post has been told by council chief executives across the region that they will struggle to meet their legal obligation to balance their books if no more government support arrives in the coming months.

They have already discussed the prospect of many of the 22 local authorities in the Yorkshire and the Humber region making a choreographed joint declaration that they have run out of money.

Issuing so-called Section 114 notices en masse, following the example of crisis-hit Northamptonshire County Council in 2018, would mean the authorities would have to impose severe spending restrictions.