Loss of income during pandemic has left £16m gap in council finances

A COUNCILLOR has indicated that taxpayers in Nottingham will have to fill a £16m gap in the city council’s finances caused by the coronavirus pandemic.

The gross financial impact of the Covid pandemic in the 2020/21 financial year was £66.5m, offset by Government grants and compensation which totalled £50.1m.

However, this has left the council with a financial hole of £16.5m.

The majority of this was the result of the loss of income, from areas such as the council’s own companies.

During a scrutiny committee meeting at Loxley House Councillor Georgia Power, who represents the Bestwood ward, asked whether the outstanding £16m would be offset by further Government grants and support.

She asked: “Is there any indication from the Government that they are going to fill that £16m gap?”

Responding, Clive Heaphy, interim corporate director of finance at the council, said: “Most of the costs from this council have been from a loss of income.

“So, have Covid costs been covered? By and large, yes. Has the loss of income been covered? No, it hasn’t. Is there any indication from the Government that is likely to be met? No, not at all.

“I think councils will have to meet [that].”

Councillor Power added it would be the Nottingham taxpayer having to pay the price as a result.

Th news comes as the council continues in its efforts towards financial stability.

A new budget is under consultation and concerns have been raised that the measures the council must take will be “extremely detrimental”, particularly to young people.

The Labour-led authority must also find a way to pay back its housing revenue account after unlawful payments to its general fund, totalling £15m, were recently uncovered.

There are some minor positives, however.

According to Mr Heaphy, core spending power has risen from £287.2m to £307.5m, an increase of £20.3m, and this is the “most generous settlement” the council has seen for some time.

This money comes in the form of Government grants, such as the social care grant, which can be both used on adult and children’s care.

“This has been relatively good news that we’ve had an increase in spending power,” he said.

The problem is that many properties in the city are within a council tax band which provides the lowest income, meaning the city typically struggles to get significant sums in the form of tax.

Mr Heaphy says the Government’s return to offering grants is “welcome” because Nottingham benefits more from this due to its lower council tax banding and its generally high levels of deprivation.