10,000 take up tax deferral
More than 10,000 Telford and Wrekin residents took up an offer to defer their council tax because of the coronavirus pandemic, and the borough finance boss predicts a “significant drop” in collection throughout the year, a report says.
Writing for the cabinet, Chief Financial Officer Ken Clarke says recovery of unpaid council tax was suspended in March 2020 and, in May, seven percent of due instalments were unpaid.
Lost income from council tax and business rates totals £8,000,000, and he says this is one factor contributing to the “extreme financial pressures” the council is facing. Others include increased costs in social care and safeguarding, purchasing personal protective equipment and the closure of facilities and services.
Mr Clarke’s Financial Monitoring Report will be discussed by Telford and Wrekin’s cabinet when it meets remotely on Thursday, July 9.
In 2019-20, just over 97 per cent of all council tax was collected by the council, although Mr Clarke’s report notes that debt recovery efforts continue after the financial year itself. The year-end target for 2020-21 is now 91.2 per cent.
By this time last year the council had collected 19.1 per cent of its total tax for the year. This year the figure was 16.3 per cent.
“Recovery was suspended in March 2020 due to the Covid-19 pandemic,” he writes.
“Deferred payment arrangements were offered and 10,500 taxpayers took this opportunity.
“The lower collection rates are, therefore, partly attributable to the later instalments.
“Ninety-three percent of the instalments due in May were paid, meaning that seven per cent was unpaid.
“A significant drop in in-year collection is currently anticipated this year but the position will be closely monitored and appropriate supportive recovery arrangements will be put in place which may include payment plans stretching in to the next financial year.”
Discussing the budget pressures generally, Mr Clarke says the Covid-19 pandemic is having a “huge impact” across the UK.
“The UK went into full-scale lockdown on March 23 in an unprecedented step to attempt to limit the spread of the disease,” hr writes.
“In line with government guidance, a number of council services and buildings were closed to the public including the main council offices, the Theatre and all leisure facilities and libraries.”
His report details areas where income has been lost or extra spending has been needed. Adult social care costs have risen £8,163,000, while the closure of leisure facilities has cost £2,837,000 and shortfall in rental income has led to losses of £2,129,000.”
The £28,700,000 total was partly offset by a £10,100,000 government Emergency Response Grant, but £18,600,000 remains.
“This is prior to using any of the budget contingency, part of which could be released towards the shortfall, although it would be prudent to retain part of this for any unforeseen costs in the remainder of the year,” he adds.
