Scheme to compensate councils for lost income offers hope to local museums - Museums Association

Scheme to compensate councils for lost income offers hope to local museums

Funding for English local authorities will compensate them for income lost from parking, leisure and culture
Jonathan Knott
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The scheme could benefit local authority museums like Bristol Museum and Art Gallery
The scheme could benefit local authority museums like Bristol Museum and Art Gallery Bristol Museums
Museums run by local authorities in England could benefit from a UK government scheme to replace some of the income lost by councils due to the coronavirus pandemic.
But local government representatives have warned that even with this support, local authorities will still have to make cuts.
There have recently been growing fears for the future of local authority-funded museums after some councils warned that budget shortfalls could force them to cut non-statutory services such as culture.
Under the income compensation scheme, the government has said it will replace 75p of every pound of planned income that councils in England have lost from sales, fees and charges, not including the first 5%.
This is to recognise “the unprecedented impact the pandemic has had on councils’ income from car parks, museums and other cultural assets”.
The government says the scheme “balances the need to provide compensation given the scale of the income losses, encouraging councils to manage and minimise loss where they can and giving them the certainty they need”.
No details of how the scheme will work have yet been published.
As part of the same support package, the government is also providing an extra non-ringfenced £500m for English councils to help them address spending pressures due to the pandemic. The devolved administrations will receive emergency cash for the same purpose, at a level of £50m in Scotland, £30m in Wales and £15m in Northern Ireland.
In addition, the government will allow English councils to spread their tax deficits over three years rather than one.
Geoff Winterbottom, the principal research officer at Sigoma, which represents 47 unitary and metropolitan local authorities in England, said some of the group's members had been "encouraged" by the proposals.
"The government’s support package is designed to prevent councils making knee-jerk decisions about what they can fund this year, but they will still find themselves facing financial pressure.
"It will be for each authority to decide what services they can sustain in the longer term. Cultural and heritage services will be a lower priority than statutory services such as social care or public health. But they are widely used and many residents set a lot of store by them.
"Where culture plays a significant role in tourism, this could be a deciding factor”.
The Local Government Association and the Chartered Institute of Public Finance and Accountancy (Cipfa) have said councils remain under significant financial pressure, despite the new support package.
Cipfa said that while the additional funding was welcome, it would not cover the full extent of costs incurred by councils as a result of the pandemic, particularly in social care. The organisation also said the Ministry of Housing, Communities and Local Government (MHCLG) appeared to have rowed back on an earlier promise to support local authorities in full.
In a statement, Cipfa said: “Covering 75% of income losses from fees and charges leaves a significant £0.8bn financial gap. A further challenge is lost income from council tax and business rates. Deferring this over three years rather than funding the loss kicks the problem into the long grass, but is nonetheless welcome to avoid pressure on council tax calculations now. 
“The government has committed to addressing some of these challenges in the spending review. However it is clear that over time MHCLG has moved away from an initial vow to support local authorities in full, to promising future attention in the context of 'burden sharing'.  
“Now that the government has today finalised its package, this autumn’s budget round where councils plan for 2021/22 and beyond will be the toughest they have ever experienced. Residents up and down the country are likely to experience service redirections as councils meet their statutory duty to balance budgets.”

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