With tough new lockdown measures across the UK to counter a surge in Covid-19 cases, businesses and citizens are once again struggling.
The government has announced another £1.1bn of discretionary grant funding for Local Authorities to allocate to businesses impacted by the lockdown. This funding is in addition to a further £594 million being made available for Local Authorities and the Devolved Administrations to support impacted businesses which aren’t eligible for the grants.
Businesses will need to apply to their local authority for such funding. This reinforces the critical role local government is playing in managing the impact of the pandemic in its communities, but also adds even more pressure on stretched councils.
Local Authorities are already under significant pressure as they face a “perfect storm” of reduced Central Government funding, reduced revenues from closed services like leisure centres, and an increase in demand for services from citizens. Local Authorities in Wales are also seeing added pressure to provide comprehensive and robust Track, Trace and Protect services to locate and isolate cases of Covid-19.
Councils may well have to go even further in supporting citizens and businesses through this difficult time. The ongoing impact on personal finances is unfortunately expected to bring about rising levels of citizen debt.
There is light at the end of this long tunnel with the rapidly accelerating vaccination programme, itself an additional but welcome challenge for local government. However we will keep seeing the impact of redundancies, furlough, and loss of business revenue for years to come. Local Authorities should be prepared for such demands, while keeping a close eye on escalating costs.
What’s the answer?
1. Focus on individuals
With mounting pressures on local authorities, happening at such great speed, it can be tempting to rush through decisions, cut corners and let standards slip. In the long run however, such an approach is counter intuitive. There’s even more reason to “treat customers fairly” and ensure good outcomes for citizens facing difficulty and hardship. Where citizens are struggling to pay bills, and asking for financial support, it’s vital that local authorities take an empathetic and ethical stance. The public sector as a whole, including central and local government is under significant scrutiny in the way it handles the pandemic and the financial crisis. This scrutiny is likely to continue for some time, with added pressure from the media, looking out for mistakes.
2. Recoup revenues where possible
It’s clear that councils need to do what they can to bring in additional revenue. They need to fill in the funding gap from central government, and also cover the lost revenues from services impacted by Covid-19 for example leisure centre closures, a drop in parking fees.
To ensure citizens are treated fairly, while also recouping much needed funds to reinvest in key services, councils can set up payment plans for citizens. When a citizen falls behind in making payments for council tax, rent or other fees, they’re often required to pay back those missed payments quickly. Their current financial situation isn’t taken into account, and a one size fits all approach is taken. Council tax reduction will probably be recommended but there is pressure on councils to move quickly to recovery. Such an approach can be very costly for a council, with minimal funds being recouped from the citizen.
The approach taken in some financial services when a customer falls into arrears is the setting up of a payment plan. This plan spreads the cost of missed payments across many months or even years. The repayments are set at a level that’s genuinely affordable for the customer. Open Banking can be used to carefully assess what that level should be without the intrusive and subjective aspects of an income and expenditure questionnaire. The customer is able to repay what is owed, the provider recoups at least some of the missing funds, and the customer can slowly and sustainably move out of debt. Such an approach aims to avoid costly, painful and time-consuming legal processes.
3. Outsourcing to meet demand or fill skills gaps
Throughout the pandemic, and likely for years after, we will see financial hardship at much higher levels than we’re used to. The impact of the pandemic happened quickly, and we’re still seeing pacey change that can be challenging to keep up with. Although councils are under significant pressures with finances and resources stretched, there’s still a need to continue operations, scale up the response, and quickly.
Outsourcing some short term and specialist activity such as council tax arrears, or Covid-19 tracing programmes, enables councils to rapidly respond to a changing environment, without the need for huge upfront investment. Recruitment, training and onboarding of new personnel is covered by the outsourcer. Councils can also draw on the expert knowledge and experience, as well taking advantage of specialist risk and compliance or technical expertise to support the ramp up of key activities.
At Target our software manages arrears and payment plans for public sector clients, and we’re working to support councils and local authorities to supplement critical customer facing employees as demand for support increases.