Financial impact of Covid-19 on Stafford council could be almost £4 million next year
The ongoing impact of Covid-19 on Stafford Borough Council's finances mean it could face a hit of almost £4 million next year – or just over £1 million in a best case scenario – it has been revealed.
The council has already seen a loss of over £1 million in its expected income between April and September this year after takings from car parks and other services plummeted during the first lockdown.
A further financial hit is now expected in the coming months, Stafford Borough Council’s cabinet heard on the day England went into its second lockdown period. Senior council members have been presented with best and worst case scenarios of how the authority will be affected by Covid-19 in 2021/22 as part of the financial plan report for the years leading up to 2023/24.
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The “optimistic” projection is a £1.038m impact, including £358,000 income loss and £400,000 cost pressures. But the “pessimistic” prediction is a £3.894 million hit, with a £1.074 million income loss and £1.2 million cost pressures.
Councillor Mike Smith, cabinet member for finance, told Thursday’s meeting: “This time last year I said we had considerable uncertainty about our future finances.
“We were expecting a change to business rates retention and New Homes Bonus and a business rates reset. Both the reset and reduction in New Homes Bonus would have been a kick in the teeth to a council like us because it punishes success, which is what we’ve had over the years.
“However none of these things came to pass – instead we’ve had this awful pandemic, which has created even more uncertainty about our future finances. It’s severely depleted our income – notably car parking – and it has had a severe impact on our leisure provider.
“We had expected to have a surplus of £163,000 this year to go towards future capital costs. But this is now not a benefit of £163,000 – it’s a loss of £755,000.
“The Government has provided us with considerable support but it will never cover all our costs and loss of income on the basis our budget should always allow for some shortfall of income.”
As well as income losses the authority has faced increased costs to support the borough’s most vulnerable residents during the height of the pandemic in the spring.
The largest cost increase was seen in the homelessness service, where an extra £132,000 was spent. A further £72,000 was spent vulnerability hub services, such as providing food and personal protective equipment (PPE) while £27,000 support was given to Freedom Leisure, which runs the borough’s leisure and cultural services on behalf of the council, to help meet costs as venues were forced to close in March.
The authority was projected to lose £1.69 million in income this year, including £1.36 million from car parking charges and £108,000 from its markets. But with the announcement of the second lockdown this figure is likely to increase, Councillor Smith said.
“We’ve also suffered a reduction in council tax and business rates income as people struggle with their bills”, he added.
“We know the Government’s planned changes for business rates and New Homes Bonus have been postponed but there is a stark possibility that there will be a business rates reset – that is still on the table.
“We have received £1.7 million to help address our own shortfalls and extra costs. However, if the Government does reset the business rates we will lose £1.6 million.
“Through our MPs and officers we have had some good news recently that the leisure provider will get some recompense through the Government. Again we were in danger of being punished for going down the road of saving ourselves £900,000 by outsourcing to a not for profit enterprise, but fortunately the Government has seen that we had a good case and they’ve agreed to support the leisure industries.
“We also continue to maintain our focus on our ambitious economic development programme – in particular Stafford Station Gateway, Meece Brook and also the magistrates’ court area. And of course we are obliged to set a balanced budget.
“Because of the uncertainty we may have to amend the plan as a result of the Spending Review due shortly and the effect of Covid-19, which has become more prevalent with the changes that have taken place from today.”
