Credit, Collections & Insolvency News
The Government has announced that it has launched a comprehensive new funding package for councils to help address coronavirus pressures and cover lost income during the pandemic.
The government says that it has delivered an unprecedented package of support to councils over recent months, and councils in England will now receive a further £500 million to respond to spending pressures they are facing.
Recognising that councils are best placed to decide how to meet pressures in their local area, this funding has not been ringfenced.
In addition to this funding, a major new scheme introduced by the government will help to reimburse lost income during the pandemic and boost cash flow.
Where losses are more than 5% of a council’s planned income from sales, fees and charges, the government will cover them for 75p in every pound lost.
Additionally, to enable them to get on the front foot and build much-needed breathing space into their budgets, the government is also bringing in changes so that they can spread their tax deficits over 3 years rather than the usual one.
Overall, in the last 6 months, government has worked closely with local authorities to understand their needs and provided more than £27 billion to help councils, businesses and communities through COVID-19.
This comprehensive support includes:
Local Government Secretary Robert Jenrick MP said “Councils are playing a huge part in supporting their communities during this pandemic. From supporting the most vulnerable and keeping vital services running to operating local track and trace, council workers have been at the forefront of this great national effort and are the unsung heroes of this pandemic.”
“Today I am providing a further package of support that takes our support for councils during this pandemic to £4.3 billion to help meet the immediate pressures councils are facing. I know that the loss of revenue from car parks and leisure centres has created huge difficulties, so I am introducing a new scheme to help cover these losses.”
“This government will continue to stand shoulder to shoulder with councils and communities as we recover from this pandemic as we renew our commitment to unite and level up the country.”
“The package also follows the Prime Minister’s announcement yesterday of the fast tracking of £96 million of investment through the Towns Fund to help kick-start activity in town centres and high streets, improve outdoor spaces, build cycle lanes and more. £360 million will also be provided to redevelop brownfield sites to provide much-needed housing.”
Minister for Regional Growth and Local Government Simon Clarke MP said “Since the start of this pandemic, local councils have been at the forefront of our national effort to tackle the virus, and they will continue to play a significant role as we look towards our recovery.”
“We are more committed than ever to unite and level up this country and this package will ensure councils have access to vital, additional funding so they can continue to serve their communities as they so admirably have done to date.”
Commenting on the announcement, Richard Lane, Director of External Affairs at StepChange said “This welcome new funding will help to ease the burden on council finances and enable them to provide more support to financially vulnerable residents. We hope the news that local authorities will have three years to repay any council tax revenue deficits will feed through to their approach to recouping arrears from local residents. Both central and local government should confirm that this is the expectation.”
“Heavy-handed and unrealistic repayment demands for council tax arrears in the post-pandemic period are pointless and unnecessarily frightening given the situation many people find themselves in – and the resumption of bailiff visits to enforce them from the end of August is particularly worrying. We look forward to confirmation that the increased flexibility given to councils will feed through to a similarly empathetic approach to their debt management.”
Dame Gillian Guy, Chief Executive of Citizens Advice, said “Local councils have seen their incomes drop sharply during the coronavirus pandemic. The government’s new financial support package will no doubt be welcome news.”
“Millions of people have also had to cope with a sudden fall in income, and are struggling to pay their council tax and other essential bills. It was good to see this problem recognised in today’s announcement, and a commitment to look at council tax debt in more detail in the forthcoming spending review.
“It’s an opportunity for the government to help lift people out of the financial difficulties caused by three months of coronavirus lockdown, and prevent them becoming entangled in longer term debt problems.”