Heather Jameson 25 August 2020

Income compensation scheme fails to cover the cost of Covid

Government plans to compensate councils for income lost due to Covid-19 are only likely to cover half the cost of the losses, it is claimed.

Guidance issued by the Ministry of Housing Communities and Local Government (MHCLG) has set out the rules for claiming back lost cash.

Under the rules, councils will have to shoulder the first 5% of losses on income such as car parking charges and leisure facilities. They will then receive 75p in every pound lost.

However, the details of the scheme reveal that there will be no compensation paid for lost income on investments – despite central Government pushing councils towards a more commercial approach to their finances in the past few years.

Lost rental income is also excluded from the compensation scheme, and outsourced services are not eligible to apply.

Responding to the announcement, a London Councils spokesperson said the guidance did not give councils clarity or reassurance.

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