New figures reveal the coronavirus pandemic has 'exacerbated an already challenging financial situation' for Leicestershire County Council.

Action being taken to reduce the impact of the health crisis on the county council's finances is working, says the local authority, but the pandemic will significantly push up the future budget gap.

A report shows the health crisis is forecast to generate an £18m overspend for the authority this year – down from £28m – and set to increase the budget gap from £39m to £50m by 2024.

Extra costs and loss of income have increased costs by £90m this year alone – which after Government grants and guidance reducing the need for extra bus services, leaves an £18m gap.

Councillor Byron Rhodes, cabinet member for finance, said: "Covid-19 has exacerbated an already challenging financial situation.

"I'm pleased that the measures we're taking are working but the financial impact in future years is even more uncertain.

"Even without further lockdowns, it is vital that the county council continues to reduce this year's gap to avoid an impossible challenge building up in future.

"The financial difficulties experienced pre-Covid, relating to demand for services, have not gone away and the mitigations have been disrupted by the crisis.

"This means that focusing on our priorities is crucial.

"And that's why we're working closely with managers to stop non-essential recruitment and spend and step up spending controls.

"Thanks to taking tough decisions since 2010, we're in a good position compared to other councils who are effectively about to run out of money.

"And furloughing some staff, reviewing capital projects and controlling spend mean we're not at risk of being unable to balance the books in the short term.

"Government support has been significant but not enough.

"Without funding reform or a major efficiency initiative, more savings will be required including service reductions.

"The 'rule of six' announcement this week highlights how precarious the situation is - and the real risk of a return to greater lockdowns that would have significant financial consequences."

The key Covid-19 costs for the council break down as:

• Supporting vulnerable people: supporting the recruitment of new staff, fully reimbursing them for the national living wage, paying social care providers in advance, increase in fees to providers

• Keeping services going: higher waste disposal, IT and construction costs

• Lost income: reduction in Council Tax, business rates and commercial income

The report will be considered by the council's scrutiny commission on Monday (14 Sept) and cabinet next Friday (18 Sept).