A report has revealed that the cost of the coronavirus crisis to Lichfield District Council could be as much as £4.5million.
The figures are outlined in a document due to be discussed by members of the cabinet next week.
The report – drawn up by Cllr Rob Strachan, cabinet member for finance, procurement, customer services, revenues and benefits – looks at a range of scenarios based on a reduction in income and additional costs due to the COVID-19 disruption.
Three worst-case projections for the coming year were put together in the report
- A 1% drop in collection rates leading to a £1.28million financial impact.
- A 5% drop in collection rates leading to a £2.92million financial impact.
- A 10% drop in collection rates leading to a £5.41million financial impact.
The scenarios were put together based on factors such as long term support for leisure centres and continued drops in car parking revenue.
“The ongoing COVID-19 pandemic has already had a significant impact on local council finances, the effects of which will continue through the current period of lockdown and beyond.
“The financial impact will be due to both unforeseen but necessary, expenditure and reduced income from fees and charges, council tax and business rates.
“At this stage, we can only estimate the impact and there are very few ways we can really understand what the long term impact on our economy will be, which parts will be most affected and how the council tax and business rates will recover.
“The additional spend and reduced income leads to two immediate financial concerns – the cash flow position of the council and its ability to meet the 2020/21 budget and beyond.”The Medium Term Financial Strategy and the projected financial impact of the COVID-19 Pandemic report
“The COVID-19 crisis is likely to be long-lasting”
The report also warns that there could be longer term implications for the council to deal with.
A forecast of the potential impacts of the local authority’s financial reserves – which stood at £7.56million at the end of March – could see them completely wiped out by 2025.
“It is essential that the council focus on the likely impact that the crisis, and its aftermath, will have on income levels both now and potentially into the future.
“The COVID-19 crisis is likely to be long-lasting and far reaching, affecting more than one financial year.
“It could be difficult for councils to reduce their spending back to pre-crisis levels and income streams will not necessarily bounce back quickly, especially if the local economy is in recession.”The Medium Term Financial Strategy and the projected financial impact of the COVID-19 Pandemic report
The report will be debated by the cabinet on 7th July.