Elections 2024: What's Peterborough City Council's financial position?

In the run up to the local elections, parties of all stripes will debate council finances.

Setting the annual budget and trying to stick to it is a challenge all councillors face every year.

Its sprawling and multi-faceted: councils receive, spend and save money in multiple different ways.

Their bank balance is also affected by the decisions of council leaders and staff, the government’s local authority settlement and other circumstances which impact the general state of the economy.

So what's the situation locally? Looking at this year’s annual budget report and an independent report on Peterborough City Council’s (PCC) finances, below is a snapshot of its current financial position.

Spending Power

PCC set a net budget of more than £200m at the start of the current financial year.

Councils are required by law to set a balanced budget each year, but this doesn’t stop overspending. Last year, its overspend was greater than £2m.

It also faces budget gaps of £3m next year and £7m the year after and will have to find additional savings to close these on top of the £11m savings already planned this year.

The independent panel says its current budget is “ambitious and not without risk particularly from factors that are outside the council’s direct control such as inflation”.

Council tax

PCC raised council tax by 4.99 per cent this year: the maximum amount it can do so before having to put the issue to voters through a referendum.

This put council tax for a band D property at £1,666.27 (p. a.).

PCC says it anticipates doing the same for at least the next two years.

It expects to receive around £100m in council tax this year.

It also receives money via business rates and government funding.

The council is responsible for social care, highways, waste and recycling, education, planning, housing and more.

Savings

Councils have cash reserves, made up of money they accumulate each year and put into their savings.

PCC’s total reserves stood at £41m when it set its annual budget this year.

This is lower than the £70m they were worth in 2022/23.

They’re also forecast to continue falling, with an estimated £30m left next year.

The independent panel has said the council must make plans to address its future budget gaps which “explicitly exclude any anticipation of further use of reserves”.

It has suggested other cost saving measures, such as sales of assets.

Assets

The estimated total value of the council’s property assets is £381m.

Its community assets, such as libraries and community centres, make up just £2m of this.

A plan to sell some of these and repurpose others has in process for almost a year.

PCC says it receives around £3.4m per year from its property holding on top of £1.8m from its car parks.

Debt

PCC has a “high level of historic debt”, the independent panel says, “and ideally this should be reduced in future years rather than increase”.

The debt position is currently £462m, with £65m due to mature this year: this could mean it’s re-financed at a higher interest rate.

For comparison, national debt exceeds £2.5bn.