• Development Intelligence

Covid-19 impact on council finances



For many years now, and particularly since the 2008 crash, central Government grant to local authorities has been dropping lower and lower. Councils have reduced services and, in many cases, invested in property themselves to buy in income streams. The result is that local authorities are exposed to the office and retail investment markets more than ever. Spare a thought for famously invested Spelthorne, a small council turning over £120 million per annum which has invested in a £1 billion property portfolio!

Two obvious problems now loom for local authorities. The first is that these brilliant investment strategies are going to throw off much less income for the foreseeable. The safe haven replacement for Government grant has turned out to be…well less safe. Second, business rates, another stable income stream, with all the tenant volatility right now is going to be…well less stable. The DI team already know of one local authority which has an annual budget of £250 million but which now has a £50 million black hole. In this current financial year! Yikes!

The impact for all of us? Less officers? A rise in planning application fees? More S106 costs? Higher CIL? In the end, the property industry is going to be one of the sectors Government will target to make up the shortfall.

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