Peterborough City Council's budget gap now expected to hit nearly £14m, latest figures show

Peterborough City Council’s (PCC) budget gap is projected to rise by several million pounds more than previously thought over the next few years.

The authority now faces a shortfall of £6.2m next year (2024/25), rising to £8.6m the year after and £13.8m the year after that, its most recent medium term financial financial strategy (MTFS) report shows.

This is a significant increase compared to its last report, published in September, in which a £5.1m budget gap was forecast next year (+£1m), followed by £6.1m (+£2.5m) the year after and £10.5m (+£3.2m) the year after that.

The figures PCC reports are the midpoint between what it believes are the best and worst case scenarios after taking into account factors such as predicted inflation rise and expected funding, so the gaps that materialise could be lower – or even higher – in reality.

The most recent MTFS also shows that PCC’s reserves – essentially its savings account – is projected to almost halve over the next three years.

In March 2023, the council’s reserves stood at around £70m, but this is expected to fall to £40m by March 2024, then down to £37m the year after and £35m the year after that (March 2026).

Rising inflation and social care pressures are 'major factors'

The council says that rising inflation is the largest factor in its increasingly pessimistic financial forecast, followed by extra pressures on its social care services.

Inflation is responsible for £19.5m of the pressures over the three-year period included in the report, it says, while demand for children’s and adults social care services is responsible for £9.7m of the pressures.

Rising contract and energy prices are the biggest drivers of inflationary pressures, it continues, while demand for social care services has risen dramatically over the past two years.

Costs associated with children in care placements with complex needs have risen by 158 per cent in this three year period, PCC says, while the number of children in care generally has risen by around 16 per cent in the last two-and-a-half years.

The demand for adult social care support – whether that be physical support, mental health support, learning disability support, substance misuse support or support for carers – has also jumped.

Over the past three years, accommodated care costs have risen by 59 per cent, PCC says, while community support care costs have risen by 46 per cent.

Council's savings plan

To try to make savings, the council says it’s looking for possible savings in children’s and adults’ services, its supply of temporary accommodation and energy.

For instance, it will review energy use across its own buildings and facilities and try to reduce its reliance on bed and breakfasts when offering temporary accommodation to those who need it.

It also hopes to make £10.7m savings next year by selling off buildings and parts of its rural estate, it says.

The MTFS will be discussed by the council’s new leader and decision-making cabinet next week (Monday, 13th November).