Council tax increase proposed to help plug £840k Thanet council budget shortfall

Councillor Rick Everitt

A Thanet council budget shortfall of £840,000 is predicted for the 2021-22 tax year, excluding any extra impact caused by Covid.

Thanet council Cabinet members are set to discuss plans for delivering a balanced budget for the financial year which will include proposals for a 2% council tax rise and a 2% rise on fees and charges which will bring in an estimated £400,000.

The fees hike will include areas of on and off street parking, crematorium fees, costs for bulky and green waste and higher port and harbour fees.

Although the budget gap is not as large as many councils in the UK, TDC leader Rick Everitt says there are still ‘difficult choices’ to be made.

The council was already under financial pressure before the COVID-19 pandemic but now faces extra costs and income losses including to leisure services. All the council’s leisure services are provided by Your Leisure and that organisation is facing unprecedented financial pressures as a result of Covid and its theatre venues remain shut.

Extra costs

The council is supporting Your Leisure in relation to direct funding, helping with bank negotiations and lobbying Government. A £100m fund has been announced by the Government to support local authority leisure providers, but the distribution of this funding is unknown. Even if Your Leisure/TDC is eligible for some funding, Your Leisure may still require further financial support from the council in the current year and next year.

There are also further expected costs as the council responds to the virus outbreak and provides support to the most vulnerable residents. The Government has allocated emergency Covid-19 funding to local authorities, but this is unlikely to be sufficient to cover the estimated budget gap.

A report to Cabinet members says: “The key risks for this budget strategy are that national or local events give rise to costs which have not been factored into the budget – there is no headroom. These risks could include, nationally, Covid-19, EU Transition and uncertainty regarding Government funding; and locally, Your Leisure, a failure to take management action now to stay within next year’s budget and political instability.”

The money that is used to fund public services is made up of Council Tax receipts, income generation including from fees and charges, retained Business Rates and any Government funding.

It is being recommended that £400,000 of government Covid funding this year is set aside as a provision against Covid losses in income in 2021-22.

Income losses

There are expected to be shortfalls in the collection of council tax and business rates with the report to councillors saying: “Collection rates are down, perhaps not as far as first expected, however substantial shortfalls in collection are expected on both Council Tax and Business Rates.

“The size of these shortfalls still cannot be estimated with certainty. The impact of Covid on the council’s Council Tax income could manifest from the ending of the furlough scheme, and increased unemployment from an economic downturn (resulting in more Council Tax Support (CTS) claimants and non-payment by those not in receipt of CTS).

“Business Rates income could similarly be hit by business failures from an economic downturn. There is also the potential cliff-edge of Business Rates relief for small businesses and those in retail, leisure and hospitality, which has applied for this year but (will end in 2021-22, with those businesses expected to start paying rates again. It is also unlikely that there will be a similarly generous business grants scheme as in this year, worth £34m so far.”

Income from parking fees is also expected to be hit if Covid restrictions continue.

There are also uncertainties around central government funding. Grants to local authorities have been drastically cut in recent years and the future for local government funding remains very uncertain, with no information available on funding from April 2021 onwards.


The council says permanent savings must be made.

This will mean each Service Director has to find savings from their budgets. There will be reduced spending and bolstering council reserves will be delayed until 2022-23 to help meet the financial gap.

Council staff also face a ‘restrained’ cost of living pay award in 2021-22 “in order to protect services and minimise staffing reductions.”

A 1% increase in pay is proposed to be built into the budget, along with the cost of paying the National Living Wage and increments. Incremental increases through the grading structure are a contractual obligation to the council and a right for staff. In addition, the council is legally required to implement the increase in the National Living wage which is forecast to increase by 5.5% to £9.20 per hour on 1st April 2021. The combination of these pay pressures will cost the council an estimated £294k in 2021-22.

‘Difficult choices’

Council leader Rick Everitt said: “There is unprecedented uncertainty around the budget-setting process this year due to COVID-19 and we expect the position to evolve before council agrees the final position in February. However, we have to plan based on what we know and protecting the services that matter most to local people will be a key part of our consideration when we meet to review the proposed budget strategy next week.

“As a result of sound financial management, we’re fortunate that we’re not seeing a shortfall next year on the same scale as the millions identified by some authorities. That said, for Thanet this is still a significant gap. It means some difficult choices must be made, and I am also conscious of how well our staff at all levels have responded to the COVID-19 situation.

“We’ve seen a substantial impact on our budget this year as a result of COVID-19 – our focus has rightly been on the immediate coordinated response to support our residents and local businesses. This additional pressure along with the increasing challenges we see each year as funding from the Government dwindles further still, means it is a sad but inevitable fact that we will have to make some difficult decisions.

“Given the huge continued uncertainty regarding COVID-19, our forthcoming exit from the EU and Government policy regarding local government, the Medium Term Financial Strategy is being pushed back to later in the budget process. At this stage there is too much uncertainty to develop a meaningful four year budget strategy.”

The Budget Strategy forms part of the council’s annual budget setting process for the financial year ahead. A separate Budget Report will be published in January in which the specific details of the savings will be provided.

Thanet District Council receives just 13p in every £1 of Council Tax. The remainder goes to: Kent County Council, Kent Police and Crime Commissioner, Kent Fire and Rescue Service and Town/Parish Councils.

Cabinet members will discuss the proposals at a meeting on November 19.