Fresh forecasts predict council budget gap to pass £34 million

New projections produced by Peterborough City Council predict the authority’s budget to grow to above £34m by the year 2026.

The rapid rise from figures that placed the amount at £15.1m, forecasted in July, has been put down to inflation, that is currently around 11 percent.

Based on their forecasting, the predicted budget gap in the next financial year is now £21.7million. This is up from the £9.5million prediction in July.

As well as unprecedented levels of inflation, a nationally agreed pay award for staff has also been attributed to putting an additional £2million pressure and the council also expects to receive less than expected from its membership of the Cambridgeshire Business Rates Pool.

In addition, although the savings needed in the current year are being met due to a number of one-offs, much work remains to identify savings in future years. Work is ongoing in this area to be able to identify areas where savings can be made.

In 2024/25 the financial challenge increases further, with a pressure predicted of £31.9m, and £34.4m in 2025/26.

Councillor Andy Coles, cabinet member for finance, said: “The past three years have been incredibly challenging financially for all councils. The pandemic placed huge strain on our finances, with the need to provide more services and fewer opportunities to generate income, swiftly followed by the Ukrainian War, soaring rates of inflation and the cost-of-living crisis. In the same way, everything is costing more for our residents, it is for the council, whether it’s the cost of filling potholes or the price of fuel for refuse vehicles.

"However, this has not taken us by surprise, and we always knew that our budget gaps could increase. That might continue as we move towards the new year, there is huge uncertainty for every council and business. What’s important is that we plan for it and develop strategies as early as possible to meet the very steep challenge and this is what we are doing.

“Our chief executive and senior leadership team is working closely with cabinet and all members to identify ways that we can make savings by reviewing all our contracts to make sure they’re providing value for money, reviewing the need for all our assets and making sure we only keep those we can afford and looking at how we can transform services to deliver them more efficiently.

“It’s a huge challenge, but it’s one we know we can meet.”

In March this year, members of full council set a balanced budget for the current financial year without any financial support from Government. This included a series of savings totalling £27million.

The council established an Independent Improvement and Assurance Panel in December 2021 to support it in achieving financial sustainability. The council received the first report from the panel in July, which confirmed that the authority has moved closer to achieving financial sustainability but there is still much work to be done.

A cabinet meeting to discuss the financial situation will take place on Monday (October 17). The agenda can be viewed on the Peterborough City Council website.