CORONAVIRUS: Council set to lose £1.75m this year - with true cost of pandemic set to hit in years to come

Finance director Paul Julian says the biggest impact on council finances during the current financial year will be the loss of income from services and through investments, estimated to be in the region of £1.75m.

But he warns that going forward there is likely to be a significant impact on both Council Tax and Business Rates received next year, and into future years.

And he says although Government funding has already been allocated to the council, it will not cover the loss of revenue and increased costs, and the council will continue to lobby for more.

Mr Julian says in his report: “The last few months have seen unprecedented changes in the way the Council and the wider economy operates, as a consequence of the global Covid19 (coronavirus) pandemic.

“For the council, working from home has increased significantly to assist social distancing measures, business grants have been paid out totalling over £12m, business rate reliefs totalling over £8m have been processed, Council Tax Support for working age claimants is being increased, and staff are being redeployed to maintain key services as the virus reduced the number of staff in some areas.”

In 2020/21, the most significant pressure facing the council will be loss of income from services as well as some investments.

The report says that based on initial estimates that will be in the region of £1.75m, including £500,000 from leisure, £460,000 from car parking, £200,000 from property Funds, £100,000 from trade waste, £75,000 from building control, £65,000 from licensing, and £250,000 from other sources, including markets. An estimated £65,000 will be lost in cash investments.

Mr Julian warns there will also be an impacted on the ongoing cost savings scheme, with a risk that all targets may not be achieved this year and an impact on future predicted savings possible.

There have also been exceptional costs associated with the crisis, including ensuring staff can work from home when possible, maintaining waste operations, cancellation of events, and retraining measures to ensure critical services are staffed, as well as the broader cost of response.

But he says: “The financial issues for the Council go beyond the current financial year.”

These include likely increase in homelessness cases and demands, increased demands on the Housing Benefit team, increase in those eligible for the Council Tax Support scheme, probable longer term increases on the council’s pension fund contributions and a likely increase in contributions required to the bad debt provisions

“Beyond 2020/21 by far the biggest pressure that councils will face will be in respect of local taxation,” he said.

“It is anticipated that a significant 2020/21 Collection Fund deficit will be declared in January 2021 for both business rates and council tax, which will need to be absorbed in 2021/22.

“The level of this deficit will depend on how much the underlying business rate base reduces during the current year due to businesses ceasing to trade and the collection rate (for those not eligible for the new reliefs), as well as how increases in claimant numbers on the council tax support scheme affect the tax base as well as reductions in the collection rate,” he said.

Beyond next year, there is also likely to be an ongoing reduction in the collection bases which will reduce resources from 2021/22 onwards.

He said the council was lobbying MP Matt Warman and the Local Government Association (LGA) to seek their support, and councils across the county had also been lobbying collectively.

Boston has so far been allocated around £750,000 in Government funding, but Mr Julian says it is insufficient to cover the current year’s cost and incomes.

“The pandemic has had, and will continue to have, large and long-lasting impacts on how the council operates,” he said.

“The last few months of unprecedented change have challenged the global economy and there will be effects felt for some years into the future.

“It is therefore important to monitor the situation as things develop, and to maintain lobbying efforts to ensure that the Government responds in a manner that enables the Council to continue to deliver valuable services for local residents and businesses.”

The cabinet meeting tomorrow (Wednesday) will be a webinair, with councillors logging in remotely and no councillors or officers in the council chamber.

Members of the public can register to view the meeting at https://attendee.gotowebinar.com/register/4901856339946591501 A confirmation email will advise you how to join.