Concerns voiced at £5.6 million shortfall in Peterborough's ambitious Towns Fund programme

Soaring inflation has been blamed for a £5.6 million plus funding gap in an ambitious programme of projects designed to ensure sustainable economic growth for Peterborough.

It is feared that a 40 year record high inflation rate, which currently stands at 10.6 per cent, and rising costs of construction will add to the expected price of eight projects that are eligible for a total of £22.9 million of Government cash under its Towns Fund initiative.

While the Government money is secure, managers of the Towns Fund Peterborough board are responsible for obtaining match funding from other sources with the amount now needed rising by £5.6 million to £24.6 million.

It means the total cost so far of the eight projects, which include an Olympic Climbing Wall and Activity Centre at Ferry Meadows, a Green Technology Centre at Peterborough College, and the Vine cultural centre in Bridge Street, will be £47.5 million.

So far, 81 per cent of that amount is secured, a further seven per cent should be met from current funding applications with the remainder still to be found from various public, charity and private sources

Andy Starnes, deputy independent chair of the Towns Fund Board in Peterborough, said: "At this stage, the funding gaps to Towns Fund projects are a manageable risk.

"Rising inflation and costs have had an impact on all projects within the Towns Fund, not just in Peterborough, but nationally.

"This is particularly the case for construction projects where the cost of building materials and demand for certain trades has increased significantly.

"As these are long-term projects, we have to be prudent and anticipate a worst-case scenario in terms of the current economic conditions nationally.

"Therefore, a healthy contingency budget has been built into each project, which has resulted in a number of projects now showing a funding gap.

"For each project with a funding gap, alternative funding streams are being identified including public, charity and private sources should they be needed, and there are live applications for these in the pipeline.

"As we move through to the full business case and design stages, more realistic costs will be determined.

"We will also have a much better idea of how the economy is performing by then and if our worst-case contingency planning is needed."

It is understood that the Towns Fund board has two years to find the extra funding as construction work on most projects is not likely to start for another 24 months.

The funding gap could also be significantly smaller if inflation falls and the economy picks up.

But this is not the first time the Towns Fund projects have been hit by financial difficulties.

The number of projects was reduced from 10 to eight in March last year after Peterborough City Council’s own funding crisis left it unable to stump up its £8.1 million share of funding for the Towns Fund.