Laura Sharman 17 July 2020

Councils call for clarity on income guarantee

Council leaders have urged the Government to provide further details on the promised compensation for loss of income due to the pandemic.

The Government has announced that councils will be compensated for irrecoverable income losses from sales, fees and charges.

Although councils will have to absorb the first 5% of losses, after that the Government will compensate then for 75p in every pound lost.

Both the County Councils Network (CCN) and the District Councils’ Network (DCN) have called for clarity on the promised income guarantee as soon as possible.

Cllr Sharon Taylor, DCN finance spokesperson, said: ‘District councils’ budgets have been severely impacted by lost income streams, such as car parking, leisure centres, council tax and business rates, and while this additional government support will go some way to plugging these revenue sources, we call on the Government to keep their promise to cover all additional costs incurred in responding to the pandemic.’

Cllr Carl Les, CCN spokesperson for finance, said: ‘We await the publication of the detail for the government’s compensation scheme for lost income in council fees and charges. However it is crucial the government brings forward an ‘income guarantee’ for lost council tax and business rate income, which pose the largest financial risk to councils over the coming period.’

The announcement was made as the Government has confirmed the allocation of £500m extra funding for councils to help meet the cost of dealing with the coronavirus crisis.

The funding will be distributed to councils based on population and levels of deprivation, and how the costs of delivery of services varies across the country.

Councils will also be allowed to spread their tax deficits over three years rather than the usual one year to help limit their cashflow problems.

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