Stroud District Council could face a funding shortfall of around £121,000 due to a drop in Council Tax income during the pandemic.

Across the three largest local authorities which impact Stroud, more than £750,000 in Council Tax income has been lost, according to estimates by the Ministry of Housing, Local Government and Communities.

The two main reasons for the shortfall are that more people did not pay Council Tax in 2020/21 than the year before and due to the impact of Covid-19, many more qualified for a reduction on their Council Tax charge.

“The MHCLG figure is only an estimate and the final figure may be higher than this,” said a spokesperson for Stroud District Council.

“This situation was anticipated by Stroud District Council and therefore the medium term financial plan, approved by councillors in February 2021, already makes an allowance for this potential funding reduction.”

Council tax paid in Stroud helps fund Stroud District Council, Gloucestershire County Council and the Gloucestershire Police and Crime Commissioner.

The anticipated deficit, £756,990, will be split between them based on their share of Council Tax charges: SDC, 16 per cent; GCC, 70.5 per cent; and PCC, 13.5 per cent.

A central Government ‘tax income guarantee scheme’ will cover 75 per cent of the income lost by local authorities due to a reduction on Council Tax charges and business rates, but not any losses due to non-payment.

The remaining deficit will be spread over three years across the three authorities.

Rob Whiteman of the Chartered Institute of Public Finance and Accountancy said: “Ultimately, this financial hole isn’t as deep as it looks.

“But with the Government ending Covid support by the end of the year, it’s hard to see how councils will be able to afford to repay the remaining deficit without additional ‘help’ from taxpayers in the future.”

An MHCLG spokesperson said: “We’ve committed over £36 billion to help councils support their communities and local businesses during the pandemic.

“We’re also providing councils with £670 million of new grant funding to enable them to continue reducing council tax bills for those least able to pay, including households financially hard-hit by the pandemic.”