Essex predicts up to £25million shortfall in council tax

Essex County Council has predicted it will face a £25million reduction in the amount it takes in council tax, due to the coronavirus pandemic.

The latest estimated reduction in council tax collection fund income for 2020/21 is £25million.

There is a high level of uncertainty about this given the level of deferrals in place and the impact of the tapering of the Coronavirus Job Retention Scheme.

However, the council has not ruled out facing a permanent income loss of £25million in future years.

It says that “if the £25million collection fund loss results in a permanent reduction to the tax base, that will also create a further £25million pressure on the 2021/22 budget, which will be a significant funding reduction for the council”.

In 2020/21 there is a forecast overspend of £12.3million (1.2 per cent) against a net revenue budget of £1billion. The overspend is directly driven by the additional costs and lost income or savings, as a result of the outbreak.

The overspend is directly driven by the additional costs and lost income or savings, as a result of the Covid-19 pandemic.

The council has lost out on £4.7million due to the under recovery of income in closed country parks and the non-delivery of savings due to the impact of the virus.

There is also shortfall of £3.6million in park and ride income, a £2.6million shortfall in income from the registrations and libraries services, a £1.7million overspend on home to school, passenger transport and adult community learning and a £1.3million overspend where the budgeted increase in commercial income, through fees and charges, is now very unlikely to be achieved.

There are further potential cost pressures related to Covid-19 that may occur from August. These include the reopening of services, social distancing measures on local buses and home to school transport.

A statement to cabinet said: “In these unprecedented times, the impact of Covid-19 and the uncertain impact on both demand for services and future income, means it is difficult to provide a certain forecast for the year.

“The position is volatile, with significant risks given the nature of the pandemic. For example, it is not clear how long social distancing restrictions will be in place for all areas; there is the inherent uncertainty around future potential waves or local lockdowns; there is funding from Government to meet substantial Covid-19 emergency costs but this falls short of the full costs and liabilities arising from Covid-19.

“There are potentially further costs arising from Covid-19 from September, including higher home to school transport costs, potential pent up demand in social care as easing continues and PPE.

“At this stage it is unclear as to whether there will be any further additional funding from central Government. It is inevitable that there will be volatility in the position as the year progresses.”

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Piers Meyler

Local Democracy Reporter