Councils’ loss of planning fee revenue due to Covid-19 can be compensated at 75% rate, government says

Councils can access a new government income compensation scheme for loss of planning application fees as a result of Covid-19 measures, the housing ministry has announced.

The MHCLG offices in London. Pic: Steve Cadman, Flickr
The MHCLG offices in London. Pic: Steve Cadman, Flickr

The Ministry of Housing, Communities and Local Government (MHCLG) published details of the new programme yesterday (Monday).

The one-off income loss scheme is intended to compensate councils for irrecoverable and unavoidable losses to income generated in the delivery of services in the current financial year, according to the MHCLG guidance.

Authorities are expected to absorb losses of “up to 5% of their planned 2020/21 sales, fees and charges income”, with the government compensating them for 75p in every pound of relevant loss thereafter.

Among the “worked examples” in the guidance that would be eligible for assistance, it suggests: "A local authority with a relevant planning function sees a large-scale reduction in planning applications where the pre-set fees aim to cover the costs related to running the service."

Lockdown measures “slow down demand for planning fees which the authority could not have foreseen”, the guidance says. “These revenues might pick up quickly once activities pick up. However, it will be difficult to know how recoverable the lost revenues are. In this instance local judgement is needed to estimate what amounts are irrecoverably lost in relation to the 2020/21 budget.”

At the end of the financial year, “the reconciliation process will seek to assess the true extent of irrecoverable revenue loss for 2020/21”, the guidance adds.

Compensation is to be based on data collected from all eligible local authorities, which “will be done three times throughout the year”, the guidance states, with resulting payments  then made “periodically throughout the year”.

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