Government to review Peterborough council’s finances over ‘wider concerns’
The Government has instigated a review into Peterborough City Council’s finances which it has “wider concerns” about.
The cash-strapped authority was one of eight to receive ‘exceptional hardship’ payments earlier this year which allowed it to balance its budget.
The Ministry of Housing, Communities & Local Government has now announced it has appointed independent reviewers to look into the management of each of the councils, however, Peterborough was one of three where it said there are “wider concerns”.
The reviewers will look at Peterborough’s “financial position and wider governance arrangements” to ensure the council can deliver a “financially sustainable” plan.
The Government allowed the city council to borrow £20 million to cover its financial deficit for 2021/22 - a process known as a capitalisation direction - which is only allowed in exceptional circumstances.
The council, which has had its government funding slashed by more than 70 per cent over the past eight years, said it was on course to balance its budget (which it is legally required to do) before the pandemic struck.
It believes that if it received the average level of funding per population then it would be between £11 to £13 million better off each year, although it anticipates a deficit of nearly £27 million for 2022/23.
The Government had indicated earlier this year it would be appointing a reviewer as it seeks to help the council meet its financial obligations on an annual basis.
A recent report from the council’s auditors Ernst & Young said that: “The combined result of increased expenditure and reduced funding poses a significant challenge for the authority over the next three financial years.”
It added: “If left unmitigated this will present an unsustainable financial challenge for the authority, which will place the authority at significant risk of issuing a Section 114 notice.”
A Section 114 notice would prevent the council from spending any money outside of statutory services.
The independent reviewer for Peterborough will be Andrew Flockhart, chief executive of Poole borough council from April 2014 to his retirement in March 2019.
He will provide an assessment of the city council’s financial management and management of risk, deliverability of savings plans and efficiency in delivering services, making recommendations where necessary of how each council can take action to improve.
A spokesperson for PCC said: “The Council has been in conversation with the MHCLG since October 2020 in relation to its 2021/22 and ongoing financial position.
“In February 2020, the MHCLG were minded to award the Council a Capitalisation Direction.
“The MHCLG required a review of the Council’s overall financial position before final award, and part of the criterion of the award was to move the Council to financial sustainability.
“Part of that work is to review the finances, but to get the complete picture, the full end to end governance processes for decision making will also be reviewed. As per the press releases issued on 30 June, these will be two separate reviews but will feed into a single report which will be received by the Council confirming the level of 2021/22 support and how to move the Council to financial sustainability.”
Local government minister Luke Hall said: “The Government has committed over £35 billion to help councils support their communities and local businesses during the pandemic.
“Even with the considerable support already provided there will be individual councils with unique circumstances which, in some cases, has been exacerbated by poor financial management on their part.
“These reviewers will ensure each of the councils have plans in place so that they are financially sustainable, minimising the need for further government support and working in the interests of the communities they serve.”