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24 August 2020

Government publishes guidance for councils on accessing the local government income compensation scheme for lost sales, fees and charges as a result of COVID-19

Summary

This is the publication of guidance on how local authorities can access the 'new, one-off income loss scheme' that aims to compensate them for 'irrecoverable and unavoidable losses from sales, fees and charges income generated in the delivery of services' due to COVID-19. Local authorities will absorb losses up to 5% of planned 2020/21 sales, fees and charges income, and government will compensate them for 75% of relevant losses thereafter. The key principles that define 'relevant losses' include:

  • the income must be transactional income from customer and client receipts, generated from the delivery of goods and services and budgeted for in 2020/21
  • the losses must have been unavoidable and as a result of COVID-19 and will not be recovered this financial year
  • compensation will be based on net losses.

Income losses not covered by the scheme include:

  • investment income
  • rental income
  • compensation paid to third parties for loss of revenue
  • income which was not included in the authority‚Äôs general fund budget for 2020/21
  • income that can be reasonably recovered later in the financial year
  • income losses which can be mitigated by reductions in expenditure, or which have already been compensated for by other government funding.

Payments will be made to local authorities periodically throughout the year, with intended payments to be made in October 2020, January 2021 and May 2021. Annex A in the guidance provides worked examples of how to apply the principles set out in the guidance. Local authorities must use new data collection exercises to collect information on relevant losses three times a year.

Source(s)

Gov.uk guidance