Peterborough City Council to invest millions of pounds into new schemes as it seeks solution to large budget gap

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Millions of pounds will be invested into new schemes by Peterborough City Council with the authority admitting it “may need to take more risk than in recent times”.

The authority has revealed a new Commercial Strategy as it seeks different ways to tackle a huge deficit due to massive cuts to its government funding.

The strategy, which runs until 2021, includes “aspirational targets” such as:

. Investing in schemes and projects which can deliver £15 million to £20 million of new revenue over five to 10 years

. Delivering a minimum of £5 million of new revenue income by March 31, 2020

. Delivering £4 million of capital receipts by March 31, 2020.

Revenue funding is money spent on services such as social care or park maintenance, while capital funding can only be spent on infrastructure projects such as road or building schemes.

The Conservative-run authority has seen its main government grant slashed by 80 per cent in the last seven years to just £10 million.

On top of that it has faced rising demand on services, leading to annual deficits of more than £20 million.

The council said its new aggressive approach towards investment is “driven by necessity”.

It added: “We accept that the council may need to take more risk than in recent times in order to achieve its ambitions and commercial success.”

No specific investments have been revealed, but there will be concerns that the authority could be risking millions of pounds of taxpayers’ money.

The council also has a mixed record when it comes to recent investments, with more than £3 million lost from an ill-fated energy park scheme which would have seen wind turbines and solar panels placed on three farms in Peterborough.

The schemes were cancelled after the government withdrew support for large scale solar projects.

Moreover, the council is currently in protracted talks with social enterprise Empower Community Management LLP over the repayment of a £23 million loan.

The loan had been given to install solar panels across the country, but it remains outstanding despite being due for repayment more than 15 months ago.

The council remains confident that the loan will be returned in full and insists taxpayers will not lose out as it can take over the profitable solar panel schemes should the money not be repaid.

Empower is also currently paying interest on the loan on top of a £10,000 monthly fee to the council.

Moreover, the council is currently loaning £15 million to Propiteer to build a new Hilton Garden Inn at Fletton Quays. The loan is expected to deliver a £500,000 profit to the authority.

Councils are able to borrow money at a low rate of interest from the Public Works Loan Board.

However, there are mounting concerns about the scale of investments being accrued by local authorities across the country as they find alternative methods to raise revenue to tackle their rising deficits.

For instance, since 2016 Spelthorne Borough Council in Surrey has borrowed £1 billion from the Treasury to invest in properties including the £360 million takeover of BP’s business park and the purchase of offices in Reading, Uxbridge and Slough for £285 million.

The city council’s new strategy includes ambitions such as:

. “Maximising value for money from contractual relationships.”

. “Thinking about the return on investment for every pound we spend.”

. “Considering new and innovative ways of generating income.”

. “Maximising use of revenue and assets.”

The council’s cabinet is expected to endorse the strategy on Monday where more will be revealed.

The strategy can be viewed in full here.

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