A closer look at how coronavirus could leave Northampton Borough Council with a £4 million black hole

The money gap for 2020/21 was revealed last week shortly before a virtual cabinet meeting on Wednesday (May 27), at which Conservative councillors on the cabinet discussed how the pandemic had affected each of their portfolios.

The biggest hit has been due to the council’s loss of income. A report read by the cabinet states: “As with many businesses the council is suffering from fixed property costs and a reduction. At present the council car parks have had charges suspended, to assist key workers with free parking in specific areas and to assist those businesses still trading.”

It also said it was continuing to suffer costs such as business rates, utilities, insurance and maintenance.

The report adds: “The current assumption is that the council will have already lost £700,000 with an anticipated reduction continuing throughout the year. The council will also lose income from the lack of ‘movements’ on which payments are based in respect of the bus station.

“The total pressure therefore could be between £1.5 million to £2 million dependent on no second peak to the pandemic. As the Market was and continues to be impacted, there is an estimated likely loss of income to the council of £75,000.”

Speaking about the car parking, cabinet member Councillor Tim Hadland said: “We’ve taken a big hit on car park income, that is income that has gone and at some stage we’re obviously going to have to reinstate charging. It’s going to leave a big hole over the year, not only have we lost income of course but all the costs keep going, so it’s something of a double whammy there.”

The other big hitter is with housing and temporary accommodation for homeless people. A scheme to put rough sleepers up in two hotels has so far cost £250,000, including accommodation, staffing and PPE. This has been offset slightly by a specific government grant of £21,000 towards this.

The report adds: “Due to a combination of factors from accommodating rough sleepers who do not wish to return to their prior position, unavoidable costs and an expectation of an increase in homelessness post lockdown – along with reduced income from enforcement and licensing – it is estimated that there will be a possible overspend of £750,000 to £1.5 million.”

There has also been a cost for the authority in acquiring commercial versions of telephone conferencing and video conferencing software to hold meetings. This and the additional volume of working ‘off site’ also required an upgrade to the council’s IT infrastructure. The costs of IT, telephone and conference facilities is currently estimated to be £75,000. Some services remain at the Guildhall, which has led to costs for regular deep cleaning.

Among other costs, there’s expected to be a £200,000 pressure in the planning department as a result of a reduction in development management and building control income from planning applications, and some applications not coming forward.

And the report adds: “There was a cost to administering both the business grants and business rates relief schemes, along with rebilling over 8,500 recipients of the Council Tax Reduction Schemes (CTRS). Additional ‘administrative funding’ has been proposed by the Government, however until it is provided the council has unfunded costs of around £200,000.”

The borough council has already received £2.36 million in non-ringfenced government grants, but it estimates that the £3-4 million gap includes that grant.

The report concludes: “The council will have more information to base its projection on at the end of June, when detailed costs are known and whether there may be additional government support. Should the assumptions be proven valid and there is no further funding support the council will need to actively consider additional savings in year or risk breaching its minimum level of safe general fund reserves.”