Council tax support increases in Peterborough due to rising unemployment but budget overspend down

The authority had previously predicted a £6.6 million overspend in 2020/21, but this has now reduced to £4.8 million.

However, the council has received a blow in its campaign to receive fairer funding from the Government after it was announced that a review into the settlements for local authorities has been pushed back to 2022.

It is believed that if Peterborough received the same level of funding per person as other authorities it would have an extra £11 million a year to spend.

The council is forecasting financial pressures from the coronavirus pandemic of £39.3 million due to additional costs and lost income.

This is being offset by £36.2 million of additional funding, although this still leaves a gap of £3.1 million.

The Conservative-run council is currently forecasting a deficit of £36 million for its 2021/22 budget.

Councillors approved measures late last year to tackle £2.7 million of the deficit, which includes a rise in the charge to collect brown bins for garden waste from £45 a year to £50 and the switching off of some lights between midnight and 5am.

However, that still leaves a large black hole to plug with councils legally not allowed to plan to run a deficit.

Senior figures in Peterborough have conceded that without additional government support it is not known how it will put together a balanced budget.

The council remains in talks with the Ministry of Housing Communities and Local Government and expects to receive its final financial settlement in February, with the final budget having to be approved by councillors by the end of March.

This will include any rise in council tax which could be as high as five per cent, of which three per cent would have to be ringfenced for adult social care.

Before the pandemic hit the council - which has seen its government funding slashed over the past decade - was expecting a deficit of £14 million for 2021/22, with £12 million of planned savings having already been outlined.

In a new report outlining its current financial pressures, it said council tax collection rates are one per cent lower and business rates collection rates 19.2 per cent lower than last year.

Moreover, the number of Local Council Tax Support recipients has increased, with a “marked increase experienced in November”.

The council said: “This increase is the result of unemployment rates rising and it is anticipated that this could increase further as a result of the Tier 4 and Lockdown 3.0 restrictions.”

The report, which will be discussed by the council’s Cabinet on Monday, concludes: “The council’s finances continue to be in a difficult position in the current and future years.

“In order to close the forecast budget gap additional funding will be required and the council continues to meet with the Ministry of Housing Communities and Local Government (MHCLG) to discuss support available.”