Essex Council’s £70m cash reserves depleted within days

Essex County Council (ECC) has admitted it has been exposed “to a high degree of financial risk”, with its entire reserves of more than £70 million forecast to be depleted in the next few days.

The council has received central government funding of £37.4 million to replenish the reserve, which has been severely impacted by pressures relating to COVID-19.

But it has only gone some way to recompense the council’s coronavirus expenditure, which has resulted in commitments to date against the general balance totalling £35.8 million.

Further decisions are anticipated within days that may see the entire general balance of £56.6 million depleted to zero.

This is in addition to the emergency reserve being depleted to £1 million from £14 million.

ECC has said that in its response to the coronavirus crisis, the council is faced with numerous unplanned, not budgeted, but highly necessary, interventions.

These include the council buying its own PPE equipment, securing 297 beds in two hotels for temporary use as community beds and securing 1,200 social care beds.

The council’s 2020/21 budget includes, within its reserves, a general balance of £56.6 million set aside to allow the council to deal with unexpected events or costs at short notice.

This sum would ordinarily be enough to fund the council’s activities for 21 days.

Using the £37.4 million COVID-19 funding received from central government to replenish the general balance would go some way to restoring some of the financial resilience that the council had budgeted for.

However, this sum would only be sufficient to fund 13 days of the council’s activities, instead of the 21 days for which it was originally planned.

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Piers Meyler

Local Democracy Reporter