Anxious wait for Peterborough council as government Covid-19 funding needed to avoid ‘big cuts’

Government funding will be essential to prevent huge cuts being needed to balance the books in Peterborough.

By Joel Lamy
Monday, 17th August 2020, 1:00 pm

The city council, which has had to make multi-million pound savings for years due to the substantial slashing of its budget, is anxiously waiting to find out whether it will be reimbursed for its spending on tackling the coronavirus pandemic.

The council has lost nearly £15 million as a result of being on the frontline of delivering support to local residents and businesses, meaning its overall deficit for 2021/22 could be as high as £28 million.

And it will now have to wait until December to find out how much support it will receive from the Government going forward, with the likelihood of “big cuts” needed if it does not receive more funding.

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In a revealing interview outlining how the pandemic has impacted the council’s finances, the authority’s corporate director of resources Peter Carpenter said all of local government will face “significant issues” balancing their budgets next year without additional government cash.

He added that the Ministry of Housing, Communities and Local Government (MHCLG) is “begrudgingly starting to realise that the frontline deliverer of the vast majority of Covid stuff is local government, and they’ve got to fund it properly”.

Cabinet member for finance Cllr David Seaton revealed that the council has suggested to the Government giving it a year’s reprieve on repaying loans or pension contributions which would “sort out the problem of the 2021/22 budget and would give us a couple of years where things can come back and we can plan the recovery of the future of the council’s finances”.

In a more positive outlook, the Conservative member for Hampton Vale, who has delayed his departure from the council to help tackle the current crisis, added: “I’m always optimistic for the future.

“Since 2008 it’s been a tough challenge and this does not help things at all. But we’ve got a really robust city, a lot of positive things like: the number of jobs that have come in, the demand for housing, the footfall which has started to come back, and the (new) university is just a fantastic opportunity for us.

“Given a fair wind, absolutely I think this city can bounce back in a positive way.”

Speaking to the Peterborough Telegraph, the council’s two finance chiefs revealed that:

. The council will tell its auditors in November that its finances are “not sustainable” for the 2021/22 budget, which has to be signed off before next April, as it will not know by then how much government funding it will receive

. Work on restructuring on the council’s operations, and how the city recovers from the pandemic, are ongoing with £9 million of potential savings already outlined

. Nearly £75 million of support for businesses has been handed out in Peterborough, both through council and government funding

. Future schemes to boost cycling and walking in the city centre are being looked at after the council decided against restricting vehicle movements in and around Cowgate following lobbying from businesses

. The pandemic has wiped out millions of pounds of planned savings for the current financial year, but there are reserves available

. A scheme to put up rough sleepers in hotels - which has been described as a success - is nearly at an end, with some people returning to the streets

. The council has been contacted about opening a new court space in Peterborough to tackle the backlog of cases.

Mr Carpenter said the council has spoken to the Government every month about its finances, but that MHCLG faces a “conundrum” on how to fund local authorities with the likely losses still unknown.

By law councils are not allowed to prepare to run a deficit.

So far billions of pounds of government funding has been distributed to councils during the pandemic, but in Peterborough the deficit has continued to rise month-on-month due to increased expenditure on services related to tackling the crisis.

By the end of July the council had spent £37.9 million on tackling the pandemic and received £23.1 million in funding, leaving it with a shortfall of £14.8 million, although more government money is expected to arrive shortly to bring that total down to around £12 million.

The £14.8 million shortfall is on top of the multi-million pound budget deficit the council was already forecasting due to cuts to its core government grant.

Mr Carpenter said: “As the Covid stuff has gone along we’ve had to do different things. Some of it’s costing money and others are costing even more money.

“We’re no different from anyone else in the country or probably most other countries in the world.”

Expenditure includes supporting people who are shielding with food and buying beds to help discharge hospital patients quicker, while there has been £2 million lost in parking income and a further £5 million in planned savings which have disappeared as the pandemic has put the plans on hold.

This includes sub-letting part of the council’s Sand Martin House offices at Fletton Quays as people have been unable to visit, although Mr Carpenter did add: “We’re having a lot of offers come in from people asking for office space.”

The council has also agreed to allocate space for an additional court which it said will help with the backlog of cases, which would include tracing non-payment of council tax and business rates.

So far, the council is forecasting non collection of up to £15 million of business rates and council tax this year, although the Government is allowing the collection deficits to be carried out over three years rather than one to ease the burden.

The council has also provided around £40 million of business rates relief to retail, hospitality and leisure providers, in addition to channelling £34 million of grants from the Department for Business, Energy and Industrial Strategy.

Mr Carpenter said councils are in a difficult position because they will not receive their final financial settlement from the Government for next year’s budget until December.

He explained: “I’ve got to sign off the accounts at the end of November. Our auditors have said you have to look ahead to at least the first two months of the next financial year and your budgets then.

“I won’t know what the local government settlement is going to be, so at the moment we’re not sustainable for 2021/22 because I do not have all the information.”

Extensive lobbying is taking place through the city’s MPs and the Local Government Association to make sure the authority receives enough financial support.

Mr Carpenter added that the council has enough reserves to cover any deficit during the current financial year, but that “next year, as with every other council, we’ve got significant issues in terms of how we balance the budget.

“(The Government is), begrudgingly, starting to realise that the frontline deliverer of the vast majority of Covid stuff is local government, and they’ve got to fund it properly.”

Cllr Seaton said the Government was taking the unusual approach of noting the financial position of each individual council.

He added: “This is the first time we’ve seen MHCLG go into the detail of individual councils’ financial positions. I think it’s a really positive thing about the specific issues that we’ve got.

“But if we get no extra funding then I’ve got a big challenge next year. We will have to make some big cuts that will be very detrimental to residents and the council.”

Part two of the interview will appear at www.peterboroughtoday.co.uk.