West Lindsey council among minority not facing council tax deficit

Many local authorities elsewhere in England are facing huge funding gaps, with the national deficit estimated to exceed £500 million for the 2020-21 financial year.

Data from the Ministry of Housing, Communities and Local Government (MHCLC) shows West Lindsey s council expects to see a surplus of £1,089,000 in its collection fund for the period.

It makes it one of just 41 councils to have seemingly avoided the "financial hole" caused by a drastic national fall in anticipated council tax income.

A spokesman for West Lindsey District Council said: "The Covid 19 pandemic has had an impact on council tax and this resulted in a softer approach to recovery action during 2020-21. However, collection rates have remained comparable to previous years and the Council has used government grants to provide targeted assistance to the most vulnerable through discretionary housing relief payments."

The collection fund represents income and expenditure relating to council tax and business rates, with estimates used to help set local authority budgets.

In response to the pandemic, the Government asked councils to estimate the impact of Covid-19 on the collection of funds for 2020-21.

More than 250 local authorities across England reported estimated deficits of between £14,000 and £17 million.

There were 10 councils that indicated they were not in deficit, but did not report surplus figures.

The national anticipated deficit rises to £546 million when surpluses are not taken into account, the figures show.

The figures do not reflect the council’s overall financial position after other funding and spending is accounted for, nor the impact of the tax income guarantee scheme announced by the Government in November.

Under this scheme, local authorities will be reimbursed for up to 75% of irrecoverable council tax and business rate losses, with payments expected to begin in the near future.

Rob Whiteman of the Chartered Institute of Public Finance and Accountancy, a trade body, said the scheme would compensate councils for a “large chunk” of the deficit.

He added: “Ultimately, this financial hole isn’t as deep as it looks.

“But with the Government ending Covid support by the end of the year, it’s hard to see how councils will be able to afford to repay the remaining deficit without additional ‘help’ from taxpayers in the future.”

Separate MHCLG figures show that, across England, council overspend due to the pandemic totalled around £6.9 billion in March, while losses were calculated at around £5.1 billion.