Additional government funding for councils has been cautiously welcomed by Bath & North East Somerset Council leaders – with a warning the money will not cover loss of rent income from the council’s commercial estate.
Last week the Government announced a £500m support package to help local councils to cover expenditure incurred relating to the pandemic, however the council has not yet been told how much it will receive.
It also announced the Income Compensation Scheme to pay a significant proportion of lost income from fees and charges, such as from parking and from heritage services. This will help councils fund the essential services they provide. But the scheme does not cover lost income which the council would expect from commercial rents. The council continues to look at ways to help its tenants with the pressures they face.
The council’s 2020/21 budget projected income from commercial properties of £17.5m and current projections indicate actual income received is likely to be significantly less. This ongoing position underlines the importance of the financial recovery plan.
Councillor Richard Samuel, cabinet member for Resources, said: “We have already agreed a financial recovery ‘roadmap’ to put the council’s finances back on track in order to protect key local services and support the recovery and renewal of the area
“The announcement of the Income Compensation Scheme will help us further manage this year’s budget more effectively, however it does not compensate for the loss of income we receive from commercial rent.
“We are acutely aware of the pressure our tenants are under and we are actively looking at further options, in addition to those already in place. Anything we do will be a fine balance as we all strive to recover from the financial impact of Covid-19.
‘Since the lockdown we have administered more than £38m in Business Support Grants to more than 3,000 businesses and we are currently inviting charities and small or micro businesses, not eligible for the business grants scheme to apply for a second round of discretionary grants to help them.”
The council has been losing £91,000 a day in parking and heritage income. In April and May of this year income from the council’s Heritage Services – including the Roman Baths Museum - fell by more than £4m compared with the same period last year. Parking revenue dropped by £1.6m. In addition the council will have to manage the impact of lost council tax income.
Councillor Dine Romero, council leader, said: “Covid-19 has brought huge financial pressures to all councils and business. The council has been dealt a double whammy of lost income and extra spend and we are cautiously welcoming the additional support announced by government last week.
“We do not know yet what our allocation of the £500m is but we do know we will only get compensation for income lost from parking and the Roman Baths.
“Last week the cabinet approved plans that will put us back on track. These included more than £20m of changes which will be made to meet the projected shortfall in 2020/21. We have had to review the timetable of delivery of capital projects and reduce the council’s salary budget by leaving vacancies unfilled and offering reduced hours.
“This situation is not of our making and the pandemic has highlighted our need to review our reliance on both the visitor economy and our commercial estate as funding sources for core council services. We need to look to a greener renewal and are supporting the call for a New Deal for Green Skills and Growth in the government’s recently announced stimulus package. Locally we are setting up a new Economic & Community Renewal Programme which has green recovery at its heart.”