Virus costs South Tyne £3m in council tax cash

South Tyneside Council collected over £3m less in council tax than expected during the first half of the financial year, new figures reveal.

South Tyneside's £3m council tax shortfall
South Tyneside's £3m council tax shortfall

The figures come as the Institute for Fiscal Studies said the impact of the coronavirus pandemic means some councils may soon face difficult trade-offs for what they can afford.

Figures from an IFS report show South Tyneside Council forecast it would collect a total £72.1m in council tax in in 2020-21.

With council tax collected over 10 months, expected income in the first half of the year was £41.5m, but it collected just £38.3m – £3.2m less than it hoped to in the first two quarters.

Figures from the report show 11,882 working age residents in South Tyneside were claiming Local Council Tax Support between July and September last year, and 12,020 between April and June.

This means the council will take in £8.7m less in council tax revenue in 2020-21 than it could have.

The Local Government Association said it was encouraged by the Government's pledge to compensate 75% of lost income, but called on it to revise its funding package in next month's Budget to meet the financial challenges of Covid-19 "in full".

The Ministry of Housing, Communities and Local Government said the Government has committed over £11bn to support councils in England.

A spokesman added: "This includes a guarantee to meet 75% of losses in council tax and business rates income this year, worth an estimated £800 million, and £670 million of new funding to enable them to continue reducing council tax bills next year."