Peterborough City Council has found £12 million to tackle its large annual deficit for 2016/17 but the effect on services remains unclear with another £7.5 million still to be found.
The council is using additional income from new homes and business rates to shrink its deficit while no decision has yet been made on whether to increase council tax.
But a warning has been sounded by Councillor Nick Sandford, group leader for the Liberal Democrats on the council, that the threat to services has not yet disappeared.
Cllr Sandford said: “I’ve not seen anything that is going to have a dramatic impact on services but there’s still a shortfall of £7 million and there’s some quite large areas of council services they have not put savings forward for.”
Peterborough Independent Forum councillors added: “The proposals published today are mid-term and ahead of the announcement of government grants and is therefore speculative and therefore needs to be read with some caution.”
Under its budget proposals the council is seeking to save £2 million each year until 2036/37 by repaying less of its capital debt, but in the long run this will mean paying back £5.7 million in real terms more than what it had previously agreed due to increased interest payments which will now be paid back over 42 years instead of 25.
The way people can access council services is also set to change with more to be made available online (saving £1.46 million in its first year) while confirmation was given that fostering and adoption services will be outsourced.
Eight compulsory redundancies are expected while another four vacant posts will be deleted.
The council estimates that it will need to save £19.6 million in 2016/17. This is because it expects its government grant to be reduced by £9.7 million on top of financial pressures of £9.9 million as a result of an increasing demand for services and legislative changes.
The first £12.1 million of that expected deficit is being tackled before the new year, while details on the remaining £7.5 million which need to be found will be revealed in January.
Any decision on council tax will be made when the council finds out if it will receive a grant from the government not to increase it, and whether a rise in council tax would need a local referendum to be agreed.
Measures included in the first phase of budget proposals include reducing the money spent on agency workers and putting together experienced social care staff with GPs.
More than £2.9 million will be raised from increased income through business rates, a grant given by the government for building new homes, and additional council tax receipts.
The council is also saving £920,000 on its Schools Capital Programme - which sets out investment in school places - by raising more money through developer contributions and grants from the Education Funding Agency.
The council has previously over-estimated how much National Insurance it has to pay and how much the salaries of its staff cost as it was expecting public sector pay to go up by two per cent. Therefore it will be now paying more than £1 million less than it was expecting to.
On top of the savings the council will also have to make additional payments which include £100,000 a year to care for children that are seeking asylum and another £150,000 as a change in government legislation means councils will be required to offer support to care leavers until the age of 25 instead of 21 which is currently the case.
The council is also budgeting to spend an extra £430,000 as companies it is contracted to will start paying the new National Living Wage of £7.20 from April 2016.
In addition, it is losing out on £440,000 of budgeted savings through its partnership with Serco. This is because Serco procures services for the council and guarantees to save it a certain amount of money.
These savings had previously been budgeted for, but because the council is no longer using Serco for its adoption and fostering services the level of savings it will make has decreased.
The council has also had to agree a rent of £260,000 less for the former Freeman’s factory in Ivatt Way. This was agreed because allowing the tenants to leave would result in a loss of business rates and rent of £2 million.
Commenting on the budget proposals, Cllr Sandford added: “The proposals are for delivering the service in a slightly different way but will not have a very significant impact on the people who use it.”
The Peterborough Independent Forum added: “As a result of sending much of our work to outside contractors time and money is spent on having to negotiate with them to provide services and how much saving can be achieved.
“We wonder how much money is lost through internal discussions and reorganisations. Savings tend to be speculative and not actual and we feel there is a lack of tangible figures to demonstrate what money, if any, will be saved.
“However, we do acknowledge that the city’s finances are over-stretched through no fault of our own and it is a hard task to meet the increased responsibilities put upon us by government and yet have to reconcile that with cuts in government grants. A growing population also increases demands on services.”
Cllr John Okonkowski, group leader for UKIP on the council, said: “The council is doing the best it can with £19 million of cuts to make.
“I’m happy how the budget is at the moment.”
Labour Cllr Ed Murphy said: “The Labour group are not prepared to accept that the £440,000 cut should be born in this proposal in order to privatise the fostering and adoption service.”
Councillor John Holdich, leader of the council, said: “This budget is the result of Peterborough being a growing, and increasingly successful, city. However, the financial challenge for the council remains constant.
“We are making the changes required to maintain good services but we need residents to go on that journey with us and use the council’s new ways of working to their benefit. This will allow us to use our resources to support our most vulnerable residents.
“These budget proposals are the product of continued hard work in order to do the best for our residents and I believe they provide a platform for continued growth in the city.”
Councillor David Seaton, council cabinet member for resources, said: “We are not proposing any reduction in services for residents. Our unerring focus has always been to ensure that the council is as efficient as possible.
“The government has made it clear that the grant they give us will go and we have to, like all local authorities, move towards self-sufficiency.
“We have a vision to achieve this by being an enterprising and innovative organisation; selling council services to other local authorities to generate income; continuing to take the dividends from growth and to invest to make savings in the long-term.
“We have taken many tough decisions in the past few years and I have no doubt that there will be more in the future. But we are committed to show strong financial management for the benefit of the city and I believe these budget proposals show how successful that approach has been.”
The cabinet will consider the first phase proposals at its meeting on Wednesday, November 25 and formally ask people to comment on the proposals.
Comments received up to 5pm on Thursday, December 3 will be considered by the cabinet at its meeting on Monday, December 7.
A meeting of the full council will then consider the phase one proposals on Thursday, December 17.
People can have say their on the budget by visiting the council’s website at https://www.peterborough.gov.uk/council/budgets-spending-and-performance/budget-conversation/ Included is a link to the budget proposals document and an online questionnaire.
Hard copies of the budget proposals document and questionnaire will be available at the Town Hall and Bayard Place receptions and in each of the city’s libraries by the formal launch of the consultation on November 25.