Peterborough City Council budget deficit gap widens - as staff pay rises hike costs by £2m

A new Peterborough City Council report has announced the budget deficit has widened again to £21.7 million.

The deficit represents the difference between the money the council has available to it, and the money it needs to cover the costs of all of its services.

Speaking to members of the Cabinet at their meeting (17 October), councillor Andy Coles, said: “We started with a £5 million gap at the beginning of the year, and at the July 2022 meeting that had raised to £9.5 million gap but now we have seen it raised again to a £21.7 million gap.

“I’m sure members will have questions as to why that is the case, but in brief inflation is increasing and is predicted to reach 13% and even more, the pay award for staff has brought an extra £2 million in terms of cost that we have to find.”

It comes as the quarter two update has been published in the Medium Term Financial Strategy 2023-2026.

Cabinet Member for Finance and Corporate Governance, councillor Coles presented the report, explaining: “Last year we were able to make a lot of our savings of the £27 million that we had to make through one-off savings, and there is very little left of that for the following years, so we don’t have that sort of flexibility.

“And finally, the Business Rates Pool – of which we are a member – provides us with additional income, but that has been re-rated and has not been as generous as it has been in the past.”

Councillor Steve Allen asked: “One doesn’t want ‘fire sales’ of council-owned properties and land, but do we have any thoughts on prudent and sensible disposals that may aid our financial position?”

Cecilie Booth, executive director of resources replied: “Yes, we do have a disposals programme that our Head of Property Services is updating as we speak.

“She is expecting to generate another £5-6 million in the current financial year, only disposing of surplus assets – we are not in any way looking at a ‘fire sale’.

"We’re not rushing in to sell our assets to balance the revenue budget, we’re using capital receipts to fund essential items in our capital programme and ideally looking at where borrowing rates are going, we will be looking to replay those because we can’t afford to replace them.”

Leader of the council, councillor Wayne Fitzgerald added: “We have a new Chancellor in House of Commons this morning who has set out his plans, so let us see what that brings and if that affects us further.”