Peterborough City Council to move into a new era of permanent austerity

Pressure on Peterborough City Council’s finances has pushed to authority into a “new era of permanent austerity”- a new report has found.

The report, published as part of the council’s Sustainable Future City Council’s Strategy 2022-25, lays bare the council's financial plight with an estimated hole in the council’s budget of £20m to £30m needing to be plugged over the coming years.

Among the reasons for the growing hole, the council has cited an increasing demand for its services, the impacts of the pandemic, the cost-of-living crisis, increases in interest rates and the cost of borrowing and the need to drive up investment caused by the city’s commitment to becoming a net-zero council by 2030.

The report states: “The money is gone and is unlikely to come back. A decade into austerity, local government finances have been eroded to tipping point, and so we face many more years of fiscal restraint as we move into a new era of permanent austerity.

"Now more than ever, our City is facing significant ongoing financial challenges and risks – doing nothing or to continue doing what we have done in the past is not an option, nor is doing less.

“We need to find our own ways to plan and then gear up for a future in which we can operate effectively, independently and do so within a reduced financial envelope.

"A cost-of-living crisis, partly driven by inflationary pressures from the cost of energy and foods, supply chain disruption and the inescapable truth of excessive monetary quantitative easing (printing money), have led to exponential price increases across all sectors and which are most felt by our communities.

“We anticipate inflationary pressures and decreasing purchasing power to continue for the unforeseeable future, effectively eroding residents’ disposable income further.

“2022 also sees the start of the end of cheap money, with inflation and monetary policies driving up interest rates and with it the cost of borrowing (debt), creating uncertainty around economic growth and certainty of the UK economy moving into recession, alongside our trading partners.”

Services in the city have already been cut significantly and drastic measures were announced year to try and close the city’s budget gap when the decision was taken to close the Key Theatre and the Werrington Leisure centre.

The council has said that it will reject a “salami slicing approach” to solving the problem and has created a four-point plan to achieve financial sustainability in the administration.

These are to:

- Reduce spending and negotiate better deals with organisations that currently provide services

- Transform services to “do more for less of have somebody do it cheaper”

- Stop non-vital services or charge more

- Continue to run the capital receipts programme/ sell off assets- even though “selling assets only yield one-off savings to our bottom line and once those assets are sold off diminish our opportunity to benefit from future returns."

The plans are to be discussed at an extraordinary cabinet meeting at 4:30pm on Friday (September 30).

The full report can be found on the Peterborough City Council website.