Pandemic will have ‘serious impact’ on Lewes council’s finances

At a virtual meeting on Thursday (May 7), Lewes District Council’s cabinet discussed a report warning the council’s predicted annual income – from council tax, business rates and other charges – could be set to fall by £11.57m, as a result of the coronavirus pandemic.

At the same time, a rising demand for council services during lockdown could see costs increase by more than £8m – meaning the authority could  have to find more than £19m in order to balance its books.

Council leader Zoe Nicholson (Green) said the situation was ‘deeply worrying’ and raised concerns about what the extent of government support might be.

Cllr Nicholson said: “Given that this council – like many, many other district and borough councils – is solely reliant on its income from council tax, retained business rates and fees and charges we’re at a place where the impact of covid-19 is potentially going to bite us quite hard.

“[The local government secretary] was very clear that money should not play a role in our decision making about the crisis. He said it about three times. So out council used its ingenuity and creativity to respond and solve the problems its community was facing.

“It is deeply worrying that we now find ourselves in a place where the messages from government seem a little unclear about whether or not both the additional expenditure and loss of income will be met.”

Cllr Nicholson’s comments came after local government secretary Robert Jenrick appeared before a Commons select committee on Monday (May 4).

At the hearing, Mr Jenrick said councils should not “labour under the false impression” all covid-19 related costs would be covered by central government.

Cllr Nicholson described these comments as ‘mixed messages’ from the government, in light of previous assurances.

At the same hearing, Mr Jenrick said he would ensure councils are compensated for fulfilling the “specific tasks” asked of them by central government.

He said the government had already provided financial support – in the form of two £1.6bn funding packages and a £4bn cashflow injection – to help councils cover “irrecoverable losses” incurred by the lockdown, such as the loss of income from parking charges.

This point was raised by Conservative councillor Joe Miller, who attends cabinet meetings as chairman of the council’s scrutiny committee.

He said: “I appreciate the financial difficulty the council is in but it must also be recognised that more than £21m of government cash support has come into the district to support businesses and the local authority.

“I think we should welcome that and I am sure all parties on the cabinet do so.”

Cllr Miller also raised some concerns about the accuracy of the council’s figures, saying he felt some of the potential losses were “severe worst case scenarios”.

He pointed to the predicted loss of commercial income (rents, fees and charges) in particular, saying the figures appeared to be large when compared to similar estimates put out by Brighton and Hove City Council, where he is also an elected councillor.

Cllr Nicholson said: “They are worst case scenarios. To be fair to the process of getting to those figures, it is actually quite difficult to assess what the long term financial impact of this will be, so we have had to present the absolute worst case.

“Of course a council that is presenting a potential loss of up to £20m when its net expenditure is only £14m is a pretty serious and catastrophic situation to find ourselves in. 

“We all hope that is not where we end up, however when we first did this report it was difficult work out what the impact might be on council tax and retained business rates without knowing what the likely outcome might be over the next couple of weeks.

“In particular because it is not clear whether, if and when, we ever really return to business as usual.

“That aside, the bottom line is that the loss of income is very significant and unlike Brighton, which is a much larger authority, we are much more vulnerable to sudden changes in budget and income.”

Cllr Nicholson said the projections would kept under review in the coming weeks and months.

A message from the Editor, Gary Shipton:

In order for us to continue to provide high quality and trusted local news, I am asking you to please purchase a copy of our newspapers.

With the coronavirus lockdown having a major impact on many of our local valued advertisers - and consequently the advertising that we receive - we are more reliant than ever on you helping us to provide you with news and information by buying a copy of our newspapers.

Our journalists are highly trained and our content is independently regulated by IPSO to some of the most rigorous standards in the world. But being your eyes and ears comes at a price. So we need your support more than ever to buy our newspapers during this crisis.

Stay safe, and best wishes.