Hertfordshire County Council is now forecasting an overspend of £2.79million at the end of 2020/21 – as the cost of the council's response to the Covid pandemic reaches more than £70million.

Over the summer months, the county council had been predicting an overspend in excess of £18m, amid fears government grants would not keep pace with the costs of the pandemic.

But at a meeting of the county council's resources and performance cabinet panel, councillors were told the council was set to receive a further £14.22m in additional government funding – reducing the predicted gap to £4.2m.

If an underspend of £1.4m across other areas of council work are taken into account, this reduces the forecast overspend to £2.79m.

And at the meeting councillors were told that the shortfall could be met from within the council's contingency budget, which stands at £9m.

"This is a considerable improvement on the Q1 position that we were reporting, principally because of some additional grant announcements," said assistant director of finance Steven Pilsworth.

"And indeed if we take into account some other underspends across the rest of the council's budget - it just narrows that a bit further .

"But at that level we can contain that within the council's contingency budget for this year."

At the meeting Labour councillor Sharon Taylor stressed that although the net pressure was £2.7m, there was a Covid pressure of £4.2m that had not been met by government.

And she pointed the 'substantial portion' of future funding that would rely on a five per cent increase in council tax on 'our hard-pressed residents'.

"We are already seeing arrears in our council tax and council rents indeed that are much higher than they were in previous years," she said.

"We are not receiving the full amount of the cost of Covid from government, although the contributions are of course welcome – but it doesn't meet the promise that was made to us."

And executive member for resources and performance councillor Ralph Sangster said: "I am as concerned as you are that central government meets its obligations in terms of providing us with sufficient finds to meet the Covid costs.

"And although we are marginally short of our expectations at the moment there are some Covid costs coming through in the announcement that was made by the Chancellor two weeks ago.

"And I think once we see those play out we may be in a better position to understand exactly how much of those extra funds are going to cover the Covid aspects of our cost profile."

Councillor Sangster also suggested that the potential uplift in council tax precepts would be to cover service increases rather than Covid costs.

Overall the county council has been allocated £61.6m of 'non-conditional funding' to support the pandemic response – and a further £7.17m in compensation for lost fees and charges.

The report does highlight concerns for the medium term finances of the council – pointing to factors that include national and local economies attempts to bounce back from recession, the impact of a second wave and further lockdown restrictions, collection and reductions in council tax and a slowing in the delivery of housing development.

During the meeting Mr Pilsworth also highlighted the financial pressures on major infrastructure projects, such as works to the A602 and he A120, as a result of Covid.

He highlighted pressures estimated £8.5m – but he said it would not be until next year when the extent of the delays and any cost impact would be known.