Sheffield Council faces £6.6 million council tax shortfall after ‘eye-watering’ amount was unpaid

Sheffield Council has a shortfall of £6.6 million due to a dramatic drop in council tax income during Covid-19.

Tuesday, 8th June 2021, 11:33 am

Data from the Ministry of Housing, Local Government and Communities showed the council needs to address an estimated shortfall of £6,604,076 in this area.

For this financial year, the council faced a budget gap of more than £60 million but managed to balance it in March, partly by raising council tax by 4.99 percent.

In October last year, the council’s then cabinet member for finance councillor Terry Fox, now leader of the council, said there was an “absolutely eye-watering” amount of unpaid council tax the authority was trying to recover.

Town Hall.

The total amount of council tax arrears for all years as of March 31 stood at £64,889,000.

In response to a written question on the subject at the October full council meeting, Coun Fox said: “As a result of the impact of the coronavirus pandemic on the city’s taxpayers (some of whom are amongst the most financially vulnerable households in the city), the council, in line with many other councils up and down the country, put a hold on council tax recovery action in the first half of 2020/21.

“For the remainder of this year the council takes a sensitive approach to council tax recovery taking steps to ensure it identifies those taxpayers who can but won’t pay and those who are genuinely struggling to pay.”

A Government scheme should help to plug the funding gap, while the deficit will be spread over three years and split between the Police and Crime Commissioner, South Yorkshire Fire and Rescue, and the council as billing authority.

But the “financial hole” caused by a drastic fall in anticipated income to the authority’s collection fund could cause resource and budget pressures for years to come.

The Chartered Institute of Public Finance and Accountancy, a trade body, warned that the end of Government funded Covid support could make it even more difficult for councils to repay the deficit.

The collection fund represents income and expenditure relating to council tax and business rates, with estimates used to help set local authority budgets.