An audit committee report reveals that the department spent a total of £40.5 million in the April 1, 2007 to March 31, 2008 financial year – meaning expenditure was more than seven per cent above a £37.5 million budget.

The report admits that the "significant overspend" was made up of a number of factors, which include significant pressures on the "demand-led looked-after children budget".

It also states that all children's services budgets have been the "subject of detailed review throughout the year in order to bring spend back in line with budget".

Cabinet member for education and children's services councillor Stephen Goldspink said: "We have experienced pressures to do with placing children in care, particularly with agencies.

"A shortage of foster carers in Peterborough means we have to look to agencies, which are by their very nature more expensive.

"We are now ensuring that we have more home-grown foster carers and that we put fewer children in care in the first place."

Elsewhere in the children's services budget there was an overspend on play centres, such as the Tunnel, in Orton Malborne, and Chestnuts, in Eastfield, because of increased maintenance costs due to ageing equipment.

However, the overspend in children's services was balanced by an overall underspend of £2.3 million, which has been transferred to the council's reserves.

The report reveals that the city council spent £239 million on providing services during the last financial year and invested £80 million in a range of services, including roads and leisure facilities.

The council's head of strategic finance John Blair said: "We are pleased that the statement of accounts has been prepared in advance of the statutory deadline.

"This will enable us to carry out a full review of the figures, which will help us when we start preparing the budget for 2009/10.

"This will be the third time the statement of accounts has gone to the audit committee and members have all received training to enable them to carry out their roles effectively."

From August, the job of balancing the council's education budget will fall on the incoming director of children's services John Richards, who is currently the authority's interim head of children's social care services.

Members of the public are welcome to attend the audit committee meeting, which will be held in the Bourges and Viersen rooms, at the town hall, at 7pm.