£15m reserve for long-term effects of Covid in Peterborough
Reserves of £15 million to cover the long-term effects of the Covid pandemic have been stashed away by Peterborough City Council.
The authority has recorded an underspend of £4 million on its 2020/21 budget, but only after putting money aside to compensate for the future impacts of the pandemic including expected support in adult’ and children’s social care.
Worryingly, having needed government support to balance its latest budget, the council is anticipating a funding gap of £27 million for 2022/23, rising to £29 million the year after.
Legally, local authorities cannot plan to run a deficit.
Peterborough has been hit by a decade of cuts to its main government grant, as well as a rise in demand for support for its services.
A new report to be considered by the Conservative-run Cabinet on Monday has outlined some of the challenges presented by Covid, including a loss of £30.2 million in revenue, albeit this has been more than met by government support (£32.3 million).
The report adds, though: “Although this funding has outweighed the additional costs, the significant needs of our communities, resulting in significant financial pressures as a result of C-19, will be long-lasting.
“The council has experienced a delay in the anticipated service demand for reasons such as families caring for loved ones at home as an alternative to using residential care and delays in the anticipated levels of children’s referrals due to school closures during Lockdown 3 and the continuation of financial support schemes such as furlough.”
To cover the anticipated extra cost relating to the pandemic, more than £12.8 million has been put aside in a new ‘C-19 Funding Reserve,’ as well as £2.3 million in a ‘C-19 Tax Income Reserve’, with future reductions in council tax and business rates expected.
Examples of how Covid has impacted the council’s finances include a £2.2 million reduction in parking revenue, an extra £1.6 million pressure to support rough sleepers and homeless families, a £700,000 deficit in expected council tax income and a £11.5 million deficit in business rates collections.
Moreover, there has been an additional £11.7 million cost in adult social care, as well as an extra £1.9 million spent on children’s social care.
But the report warns that the latter is “one of the areas where the council is seeing real signs of demand emerging”.
An example given is a 37 per cent increase in child protection plans, while Education, Health and Care Plans (EHCPs) - which outline support for children and young people with special educational needs and disabilities - are said to be rising, with the report noting: “We will see a significant increase in the number of EHCPs based on current trends.”
The council currently has reserves which are “very tight,” with only £14.1 million uncommitted or not ringfenced for a particular area.
Its total borrowing at the end of the financial year was £469.6 million, with interest of £14.4 million paid on the loans.
Earlier this year the council received special dispensation from the Government to borrow up to £20 million to cover its budget deficit. The authority said its finances had been decimated by the pandemic and that it had been on course to balance its budget (which it is legally required to do) before Covid struck.