Covid-19 pandemic could cost local council nearly £20m

Lewes
Lewes

The coronavirus pandemic could cost Lewes District Council more than £19m, a report to be discussed next week has warned.

In a virtual meeting next Thursday (May 7), Lewes District Council’s cabinet is set to discuss a report warning the council’s predicted annual income – from council tax, business rates and other charges – could be set to fall by £11.57m, as a result of the coronavirus pandemic.

At the same time, the report adds, a rising demand for council services during lockdown could see costs increase by more than £8m – meaning the authority could have to find more than £19m in order to balance its books.

For context, the council’s total reserves sat at £9.321m as of April 1 this year, although more than £6m of this had already been ringfenced for various projects.

While the figures are considered to be a ‘worst-case scenario’, the report concludes that managing the long-term financial impact of the pandemic will be ‘impossible’ without additional government funding.

In the report, a council spokesman said:

“Based on our current experience, the council estimates additional costs arising from the pandemic of approximately £380,000 per week.

“This is an approximate impact and worst-case scenario which takes into account significant loss of income, additional costs including increased demand in homelessness and housing need.

“There will be some offset to these costs from reduced purchases of non-essential supplies and services, however, this is not anticipated to be significant. 

“These costs may be mitigated more substantially by, for example, increased economic activity, income and employment levels associated with the easing of lockdown restrictions. 

“Conversely, if businesses and households continue to experience lower incomes, then lower council tax, business rates and other income to the council will remain below those anticipated in the budget.

“These longer term risks emphasise the importance of additional government financial support to local authorities as a consequence of the pandemic and the extra vital work we are carrying out in supporting vulnerable households and local businesses.”

The council – as have other English local authorities – has been allocated government funding to help with the immediate financial costs of the pandemic.

So far, the government has released two emergency funding packages, each splitting £1.6bn among local authorities in England. Across both packages, Lewes District Council’s share came to a little over £1m (although only £39,000 of this came from the first round).

The council has also received ringfenced funding to cover the costs of the government’s council tax reduction, business rates holiday and the business grants schemes.

The government, the report says, is also monitoring all councils’ emergency spending at this time.

While the report was written prior to the final figures being revealed of the second £1.6bn emergency fund, officials have warned that it is unclear whether the government funding will be enough to cover the council’s costs.

In the report a council spokesman said:

“The key point to note is that it is not possible to currently quantify all of the costs, losses and exceptional expenses that the authority will incur due to Covid-19. 

“It is also not currently possible to say whether or not the government emergency funding streams, including any future announcements, will off-set these financial impacts.

“Should these funds be insufficient, cabinet is advised that the council will need to call on its reserves.”

(By Huw Oxburgh – Local Democracy Reporter)

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