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Council sets out likely £40m cost of coronavirus crisis

Published on Wednesday, May 13, 2020

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THE local response to the coronavirus pandemic could cost Leicester City Council over £40million, according to a new report to the council’s Overview Select Committee.

The report details the council’s extraordinary costs related to the coronavirus crisis, along with the amount it has spent supporting people who are experiencing hardship and its loss of income as a result of the lockdown.

Leicester City Council is forecasting a financial hit of £35million to £40million this year, with just £21million of Government funding so far available to help meet additional costs and loss of income.

City Mayor Peter Soulsby said: “From the beginning of these very challenging times, we have made it clear that our priority will be to protect the most vulnerable in our city and do whatever we can to keep essential services running without too much disruption.

“I think we have achieved that, but at a quite extraordinary cost to the council. We do have assurances from the Government that it will meet extra costs arising from the actions it has asked to carry out. I am grateful for the support received, but so far this falls short of covering all of our expected additional costs and losses.

“We will expect the Government to cover full costs we have incurred as a result of our local response to the Coronavirus pandemic.”

One-off costs incurred by Leicester City Council include £1.2million provided to local social care providers to support them with cash needs.

The council provided £100,000 to increase the provision of food both directly and through the charity FareShare to support community foodbanks in the city. 

Up to £100,000 was also earmarked to establish a new community mobilisation fund. This allows local councillors to award grants of up to £5,000 to support community groups that are helping vulnerable people in their wards.

The city council is also spending an additional £1million per month on support for people in independent social care, and around £100,000 per month on additional care accommodation for people leaving hospital.

An extra £100,000 per month is being spent on providing additional temporary accommodation to help ensure that no-one has to sleep rough in Leicester.

The council’s emergency food hub – which is helping thousands of people in urgent need of assistance during the coronavirus lockdown – is costing around £200,000 per month. 

The impact on local tax and additional demand for council tax support could cost up to £10million by the end of the year.

Leicester City Council is also set to see a reduction estimated at £14.5million in this year’s income due to the lockdown.

The temporary closure of De Montfort Hall and council-run leisure centres is resulting in a monthly loss of around £900,000. 

City centre car parks are free to use, on-street car parking is free, planning applications have slowed down and bus lane and parking enforcement has been temporarily suspended, with fines issued only for dangerous and obstructive parking. This is all resulting in a loss of income of about £700,000 per month.

Loss of income from school meals amounts to  about £300,000 per month.

The Government has so far made available emergency funding of £20.8million to Leicester City Council to help cover extraordinary costs relating to the coronavirus crisis. 

In addition, it has provided hardship funding of £3.7million. The Government expects this to be used to pay £150 to every working age claimant of council tax support. The city council anticipates that its costs to administer this additional payment will be more than this.

Alison Greenhill, Leicester City Council director of finance, said: “We are now beginning to get a clearer picture of the financial impact of our response to the coronavirus crisis, although much depends on how we begin to emerge from lockdown and the economic recovery afterwards.

“The final costs won’t be clear for some time yet, but we do know that – like many councils – we will be facing a tremendous challenge to fund our lost income and additional costs without more Government support.”

The city council has received £44.5million of Government cash to meet the costs of new rate reliefs for retail, leisure and hospitality businesses and for nurseries. All reliefs have been awarded and are fully funded.

It is also in the process of administering the Government’s business grant scheme, for which Leicester received £85million. So far, over 4,900 claims have been processed. This amounts to over 80% of eligible businesses and £57million of grant support awarded.

Leicester City Council’s Overview Select Committee will consider the report when it meets on Thursday 21 May. The meeting will be held online.