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Thursday, 16 July 2020

Perfect Storm for Council Finances

The collapse in Council income from commercial property has had some attention.  In fact only a minority of authorities have gone down this road on a big scale.  Some of those, like Spelthorne, may not survive.

For others the real danger is a perfect storm of collapsing income.  Business rates, certainly the biggest income source in Brent, is likely to fall as businesses go bankrupt. Council Tax, the second biggest, is also likely to fall as people lose their jobs
 Even the relatively small amounts from charges are likely to fall as there is less commuting and (for example) planning applications.  Most fatally, all these revenues streams fall at once.

Simultaneously, long term changes such as demography and the fall out from the virus and the recession will lead to extra spending demand. And all of this has to be managed by an institution which is much thinner than it was a few years ago.

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