More than £1.7 million of council tax was not paid during the COVID-19 pandemic on the Isle of Wight — adding to a combined deficit across councils in England of more than half a billion pounds.
Figures from the Ministry of Housing, Local Government and Communities show a funding shortfall of £1,736,569 estimated on the Isle of Wight in 2020/21.
In response to the Covid pandemic, the government asked councils to estimate the impact of the virus on the collection of funds for 2020/21.
A government scheme, the collection fund, has now been introduced to plug the funding gap, with the ‘exceptional balance’ found over three years and split between the council as billing authority, the police and the fire service.
Data shows the Isle of Wight Council will have to address £1,494,789, with the Hampshire and Isle of Wight Police and Crime Commissioner covering £186,839 and the Hampshire and Isle of Wight Fire and Rescue Services footing £54,940.
The figures do not reflect the council’s overall financial position after other funding and spending is accounted for, however, an Isle of Wight Council spokesperson said any council tax deficit in the previous financial year is rolled into the calculation of council tax income receivable for 2021/22.
They said in setting the budget it had been anticipated there would be a deficit ‘of this magnitude’ and it has been fully reflected in the approved budget for the current financial year, which was approved in February.
When some people fail to pay their council tax, the spokesperson said, that cost either falls on other taxpayers to maintain essential council services or those service ‘must be reduced accordingly’.
Another government scheme was announced in November which will see local authorities reimbursed for up to 75 per cent of irrecoverable council tax and business rate losses which could help bridge some of the gap.
While that scheme will cover a ‘large chunk’, the Chartered Institute of Public Finance and Accountancy (CIFPA), however, has warned the end of the government-funded Covid support could make it even more difficult for councils to repay the deficit.
Rob Whiteman of the CIFPA said it is hard to see how councils will be able to afford to repay the remaining deficit without additional ‘help’ from taxpayers in the future.
An Isle of Wight Council spokesperson went on to say they do issue reminders to encourage residents to contact them if they are having difficulties in maintaining payment of their council tax with advice, guidance and flexible payment plans offered.
As a ‘last resort’ the council does have the power to take people to court and of enforcement action if people do not pay.
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