Peterborough City Council says 'everything is costing more' as budget gap widens due to cost of living crisis

Peterborough City Council has published a finance report that shows a large widening in the budget gap for 2023/24 from an expected £5 million to £9.5 million.

The council’s budget is the amount of money that it has to spend on services in any given financial year.

The budget gap is the difference between what is available to the council to spend and what is actually needed to deliver those services.

‘Everything is costing more’

Speaking to members of the Joint Scrutiny Committees at their meeting (5 July), councillor Andy Coles, Cabinet Member for Finance, said: “Like every council and business across the country we are not immune to the impacts of inflation, the cost of living crisis and the war in Ukraine.

“Everything is costing more, whether it’s heating schools and other public buildings, the cost of filling potholes, construction projects or the price of fuel.

“We always knew that our estimates of future year budgets might increase, and the expert modelling by our finance team allows us to plan and develop strategies so that we can work well in advance to reduce budget gaps and develop strategies in future years.”

In the financial year 2021/22 the council had to close a budget gap of £27 million to set a balanced budget, which it achieved.

In 2023/24 the council was predicting a budget gap of around £5 million.

However, current modelling by the finance team in the ‘Medium-Term Financial Strategy 2023-2026, Q1 Update Report’ shows that gap has now widened to £9.5 million, and in 2024/25 it is expected to widen further to £12.9 million, and as a much as £15.1 million in 2025/26.

The report highlights five areas which the Corporate Leadership Team of the council has targeted for a future sustainable council:

Getting a grip of the financial position and ensuring robust savings plans to deliver a balanced budget each year; Setting a future direction for the city working with partners to identify the role the council will play; Taking stock of leadership and managerial capacity to identify a new target operating model; Looking at the way the council does things including the decision making process, general communication, and engagement; Maximising the impact of growth for all communities to ensure it is delivered in a sustainable and inclusive way.

The report also shows areas where additional savings of up to £16.6 million could be made, with up to £4.4 million of savings potentially made in adult social care and fostering.

Councillor Coles explained: “We’ve tried to imagine where savings could be made in this area but we’ve categorised them as ‘high risk’ because they would be quite difficult to deliver.

“We could make some savings in procurement but these are also categorised as risky because we have contracts that we must honour.

“Finally, in the leisure and culture sector, we could make more savings; but that’s an area where there are pressures from the community and what’s best to invest in.”

Members of the Joint Scrutiny Committees noted the report which will now go forward to Full Council on 27 July 2022.

By Local Democracy Reporting Service.