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2 July 2020

Government announces new funding package for councils to help them respond to COVID-19 and cover lost income

Introduced by

Ministry of Housing, Communities and Local Government

Targeted at

Local authorities

Timings

Announced on 2 July 2020

Stated aims

To address spending pressures and in recognition of lost income

Summary

This is the announcement of a £500m non-ring-fenced support package to help councils respond to COVID-19 spending pressures 'as part of a comprehensive plan to ensure councils’ financial sustainability for the future'. The new scheme is introduced by the government 'to reimburse lost income during the pandemic and boost cash flow'. Where losses are more than 5% of a council’s planned income from sales, fees and charges, the government will cover them at a rate of 75p in every pound lost. The government also announces a proposal for a phased repayment of council tax and business rates deficits over 3 years, rather than requiring complete repayment of deficits next year. In the next Spending Review 'the government will agree an apportionment of irrecoverable council tax and business rates losses between central and local government for 2020 to 2021'.

Source(s)

Gov.uk press release

Technical note on local government finance COVID-19 package