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Unemployment in Essex due to Covid-19 poses a 'real problem'

Essex County Council has admitted that unemployment resulting from Covid-19 poses a “real problem” as it faces a £25million council tax income drop.

The latest estimated reduction in council tax collection fund income for 2020/21 is £25million, however there is a high level of uncertainty with this given the level of deferrals in place and the impact of the tapering of the Coronavirus Job Retention Scheme.

However it has not ruled out facing a permanent income loss of £25million in future years.

It say that “if the £25million collection fund loss results in a permanent reduction to the tax base, that will also create a further £25million pressure on the 2021/22 budget, which will be a significant funding reduction for the council.”

Cllr Chris Whitbread, cabinet member for finance, said at ECC’s policy scrutiny committee on Tuesday (July 28):  “We hope the economy improves quite quickly but let’s be honest if people are unemployed they will not pay their council tax and that is going to bring real problems to us and that is why we have identified the sums already.”

The UK’s coronavirus furlough scheme will finish at the end of October. Currently 9.5 million people are using the scheme at a total cost of £31.7billion to the Treasury.

In 2020/21 ECC has forecast an overspend of £12.3million (1.2%) against a net revenue budget of £1billion. The overspend is directly driven by the additional costs and lost income or savings, as a result of the Covid-19 pandemic.

But the council tax income remains one of the most pressing challenges faced by ECC and district and borough councils.

Cllr Whitbread said: “Our treasury officers are in regular contact with the districts and boroughs. The leader of the council has had meetings with the leaders of districts and boroughs on a regular basis.

“And as finance portfolio holder I am arranging to meet with my fellow finance portfolio holders to understand what  the pressures and challenges are for them.”

 

By Piers Meyler, Local Democracy Reporting Service

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