How funding to Peterborough City Council has been slashed over recent years

Funding to Peterborough City Council has been slashed by more than a third over the past five years, according to research published by the House of Commons Library.

Monday, 29th March 2021, 5:00 am

Funding from the Government has been cut in real terms by 37.2 per cent it has stated in a major report into local government finance.

This has led to substantial savings needing to be made by the council to sustain a balanced budget which it is legally required to do.

That challenge has proved far more difficult during the coronavirus pandemic with the authority having to request significant support from the Government which granted it permission to borrow £20 million (known as a Capitalisation Direction) to plug its deficit.

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Peterborough Town Hall

The council 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.

It also said going back eight years that government funding to the authority has reduced by more than 70 per cent.

It is now pinning its hopes on the Government’s forthcoming fairer funding review for a better outcome in future years.

Council leader Cllr John Holdich said: “There are a number of ways of looking at how local government financing has changed in recent years, but we know that since 2013/14 government funding has been reduced by over 70 per cent – around £58 million.

“In that time the council has balanced its budget each year by improving commercial income, making increasing levels of savings, driving down costs and taking advice and challenge from external experts. In addition, local government finance indicators show that we provide good services at a low cost.

“As I have said recently we cannot continue to do that and that is why the Government accepted our request for exceptional financial support for our 21/22 budget.

“However, we cannot continue to operate in this way as demand for our services continues to rise and that is why we are working with the Government to ensure ongoing funding for Peterborough sufficient to support those core services we all rely on.”

The Government in February revealed how much funding it was allocating to local authorities in the 2021/22 financial year.

The numbers have now been crunched by the House of Commons Library which shows that Peterborough’s core funding has reduced from £74.12 million in 2015/16 to £52.48 million in 2021/22.

If inflation is included, the real terms drop is from £80.82 million to £50.74 million - a fall of 37.2 per cent.

Separately, the amount of money the council has available to spend has reduced by three per cent in real terms over the same period. This includes money it is able to collect through council tax with large hikes in the precept having been included in recent budgets to bridge the funding shortfall from the Government.

The rises - which have often included precept increases ringfenced for adult social care - followed years of council tax freezes by the Conservative-run authority.

The situation is even bleaker for Cambridgeshire County Council which has seen a 50 per cent real terms reduction in its funding over the past five years, although its spending power has only dropped by 0.2 per cent.

For Fenland District Council, the figures are -45.5 per cent (funding) and -21.4 per cent (spending power), while the numbers are similar for both South Holland and South Kesteven district councils.

The House of Commons Library, which provides impartial research and information service for MPs and their staff, said: “On average in England, grant funding has decreased in real terms since 2015/16 across all types of local authority and has been largely flat since 2019/20.

“Spending power has decreased less on average, and as of 2020/21 it has begun to slowly increase, but there is much more variation in spending power between individual authorities than for funding.

“The amounts spent per person by each local authority area show broadly similar variations to those in funding – London boroughs spend the most per person and shire counties and districts the least. There is a large range of spending between different local authority areas with the highest spending typically to be found in London.”

The figures and the full report from the House of Commons Library can be viewed at: https://commonslibrary.parliament.uk/research-briefings/cbp-8431/.