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Analysing the Impact of COVID-19 on County Authority Finances

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Analysing the Impact of COVID-19 on County Authority Finances County Councils Network Analysing the impact of COVID-19 on County Authority Finances 12 June 2020 The County Councils Network 5th Floor, Local Government House Grant Thornton UK LLP Smith Square 110 Bishopsgate London London EC2N 4AY SW1P 3HZ +44 (0)20 7383 5100 +44 (0)20 7383 4715 12 June 2020 grantthornton.co.uk Analysing the impact of COVID-19 on County Authority Finances Scope of work and limitations We have pleasure in enclosing our final report (the Report) for the attention of the County Council’s Our work focused on the areas set out in our engagement letter dated 4 May 2020. Network (CCN). The Report has been prepared by Grant Thornton UK LLP (Grant Thornton) for CCN in connection with the Analysis of county authority MHCLG COVID-19 returns engagement (the The scope of our work has been limited both in terms of the areas of the business and operations which Purpose) under our letter of engagement dated 4 May 2020. we have assessed and the extent to which we have assessed them. There may be matters, other than those noted in the Report, which might be relevant in the context of the Purpose and which a wider scope We agree that CCN may disclose our Report to its professional advisers in relation to the Purpose, or assessment might uncover. as required by law or regulation, the rules or order of a stock exchange, court or supervisory, regulatory, governmental or judicial authority without our prior written consent but in each case strictly For your convenience, the Report may have been made available to you in electronic as well as hard copy on the basis that prior to disclosure CCN informs such parties that (i) disclosure by them is not format, multiple copies and versions of the Report may therefore exist in different media and in the case of permitted without our prior written consent, and (ii) to the fullest extent permitted by law we accept no any discrepancy the final signed hard copy should be regarded as definitive. responsibility or liability to them or to any person other than CCN. We have already received and General approved such permission from CCN to share the Report with the Ministry of Housing, Communities & Local Government (MHCLG), Her Majesties Treasury (HM Treasury) and Society of County Treasurers The Report is issued on the understanding that the management of the CCN have drawn our attention to (SCT) members representing CCN member councils, in addition to Bedford Borough Council and all matters, financial or otherwise, of which they are aware which may have an impact on the Report up to Cheshire West and Chester Council who are members of SCT but not CCN, on the basis that the the date of signature of the Report. Events and circumstances occurring after the date of the Report will, Report is confidential and that we accept no responsibility or liability to anyone other than CCN. We in due course, render the Report out of date and, accordingly, we will not accept a duty of care nor stress that this Report is confidential to CCN and SCT members noted above. assume a responsibility for decisions and actions which are based upon such an out of date Report. Additionally, we have no responsibility to update the Report for events and circumstances occurring after The Report should not be used, reproduced or circulated for any other purpose, in whole or in part, this date. without our prior written consent, such consent will only be given after full consideration of the circumstances at the time. These requirements do not apply to any information, which is, or becomes, Notwithstanding the scope of this engagement, responsibility for management decisions will remain solely publicly available or is shown to have been made so available (otherwise than through a breach of a with CCN and not Grant Thornton. CCN should perform a credible review of the guidance as articulated in confidentiality obligation). the document. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Contacts CCN for our work, our Report and other communications, or for any opinions we have formed. We do If there are any matters upon which you require clarification or further information please contact the not accept any responsibility for any loss or damages arising out of the use of the Report by CCN for engagement partner Phil Woolley. any purpose other than in relation to the Purpose. Yours faithfully The data used in the provision of our services to you and incorporated into the Report has been provided by third parties. We will not verify the accuracy or completeness of any such data. There may therefore be errors in such data which could impact on the content of the Report. No warranty or representation as to the accuracy or completeness of any such data or of the content of the Report relating to such data is given nor can any responsibility be accepted for any loss arising therefrom. Grant Thornton UK LLP Chartered Accountants Grant Thornton UK LLP is a limited liability partnership registered in England and Wales: No.OC307742. Registered office: 30 Finsbury Square, London EC2 1AG. A list of members is available from our registered office. Grant Thornton UK LLP is authorised and regulated by the Financial Conduct Authority. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. Please see grantthornton.co.uk for further details. grantthornton.co.uk Commercial in confidence Contents Section Page Executive Summary 04 Context and approach 20 Detailed findings: Overview of data from the Delta 2 returns 25 Detailed findings: COVID-19 cost pressures 29 Detailed findings: COVID-19 income pressures 43 Detailed findings: Reserves 50 Detailed findings: Projected financial impact on county authorities 54 Appendix A – List of county authorities included in the Delta returns 64 © 2020 Grant Thornton UK LLP County Councils Network - Analysing the impact of COVID-19 on County Authority Finances - | June 2020 3 Executive Summary Commercial in confidence Introduction Grant Thornton's role Limitations of the analysis The County Councils Network (CCN) has engaged Grant Thornton to The data used in this report is subject to the limitations of the develop benchmarking and provide analysis of the data from Delta 1 information available to councils at the time that the May Delta 2 (April) and 2 (May) returns provided to MHCLG relating to COVID-19 return was compiled and the short window of time available for financial pressures. The Society of County Treasurers (SCT) are a analysis following our engagement by CCN. We have not audited or key stakeholder in supporting this work. For the avoidance of doubt, otherwise validated the data used in the analysis. this analysis does not represent formal advice from Grant Thornton to The underlying data used for the benchmarking and the foresight individual councils. Financial decisions in regard to managing the analysis is based on the content of the Delta 2 returns provided by coronavirus pandemic (COVID-19) pressures or completing Delta county authorities, and also uses published information submitted by returns remains the responsibility of S151 Officers. councils to the Ministry of Housing Communities and Local The purpose of this analysis Government in the form of Revenue Outturn (RO) data for 2018/19 This analysis captures the results of the benchmarking and and Revenue Account (RA) budget data for 2020/21. We have also workshop discussions. CCN commissioned Grant Thornton to provide included a financial projection using our Foresight methodology, analysis on the financial impact of COVID-19 and to inform the which applies a number of assumptions to this data to provide a high- ongoing dialogue with MHCLG. level financial projection of the emerging funding shortfall for county authorities. This projection is indicative, based on the available data • In the first phase, this exercise was intended to help inform the and the assumptions are based on information gathered in the preparation of the May Delta 2 returns for CCN and SCT members. workshops and subsequently discussed and agreed with CCN and It comprised two workshops centred around benchmarking of the the SCT executive. April Delta 1 return data. Over 80 county finance officers attended. Key principles and decision points arising from the discussion were Confidentiality circulated prior to the deadline for the Delta 2 return. The content of this report is confidential for use by CCN with the • In the second phase, the benchmarking analysis was updated to expectation that it will be shared with CCN members, as represented reflect the May returns, and three further workshops, with over 60 by members of SCT. This report uses confidential information that county authority finance officers attending, were held to discuss the CCN and SCT members have agreed to share on the basis that it is results, to further develop mutual understanding of the challenges not distributed outside the approved CCN and SCT member group. faced by each council and to consider the broader financial Wider distribution outside of member organisations will be subject to implications of COVID-19 in the medium term. written consent from Grant Thornton UKLLP and CCN. © 2020 Grant Thornton UK LLP County Councils Network - Analysing the impact of COVID-19 on County Authority Finances - | June 2020 5 Commercial in confidence Headline findings Key messages from the analysis of Delta 2 returns to MHCLG and workshop discussion of the benchmarking results with county authorities are as follows: 1.
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