Peterborough City Council ‘confident’ £5.2m forecast overspend can be reduced as measures brought in to protect reserves
Peterborough City Council’s cabinet member for finance Cllr Mohammed Jamil said he was confident that a balanced budget could be achieved despite a forecast £5.2 million overspend.
A Budget Control Report was presented to the council’s cabinet on October 2 which gave an overview of the authority’s financial position at the end of the first quarter (June 30).
The council said the forecast revenue budget overspend of £5.2 million by the year end reflected a “continued challenging” financial position, which the report stated was driven mainly by delays to delivering the council’s ambitious savings programme as well as higher than estimated costs of borrowing.
If the council’s predicted overspend materialised at the end of the financial year, the authority would be required to use the general fund to cover the overspend, taking the balance of this particular reserve to below £2 million.
Cllr Jamil was keen to point out that the council was in a better position than this time last year, but admitted that more work needed to be done.
He told the Local Democracy Reporting Service: “We’ve instructed officers to go away and do as much as they can in terms of seeing where we can make those savings and how we can improve the situation.
“We’re reviewing our policies in terms of agency staff. However, the warning signs are always there when children’s services and adult services can always take money out the budget.
“If you compare it to a year ago at this stage, we were down by £11 million and this year it’s £5 million. So I’m confident by February we will have a balanced budget for this council.”
At the cabinet meeting members approved a recommendation, which will be put to full council, to implement the ‘Flexible Use of Capital Receipts Policy’ in order to help protect reserve balances.
Capital receipts, the money councils receive from asset sales, is normally restricted to funding other capital expenditure or paying off debt.
However, this flexible policy would allow the authority to use eligible capital receipts to fund the revenue costs of projects that deliver ongoing savings or improved efficiency.
The financial impact of this could result in the city council’s reserves position improving by £3m, according to the report.
Peterborough City Council chief executive Matt Gladstone told cabinet members: “Through the FSWG [Financial Sustainability Working Group], this was a matter pushed continually by the independent assurance improvement panel as well.
“It is commonplace. It is a tool that you can use to help smooth some of the pressures that you’ve got.”
Cllr Jamil said he was “surprised” that the council had not used the policy before.
The council’s reserves balances are in a “very fragile position” according to the cabinet report, at just under £18.3 million (excluding the £13.3m DSG Deficit), of which £4.2m is ringfenced for specific use.