Peterborough City Council’s predicted budget overspend rises to £6.1 million for current financial year

The authority’s budget control report for the second quarter of 2025/26 revealed a forecast £6.1 million overspend on the £233 million net revenue budget by the year end, compared to a predicted £5.2 million after the first quarter.

It comes just one month after the council’s cabinet member for finance Cllr Mohammed Jamil said he was “confident” a balanced budget could be achieved by February next year.

The report, which will go before a scrutiny committee on November 13, noted that the increased forecast overspend reflected the “continued challenging financial position” of the council.

“The overspend is primarily being driven by delays to delivering the ambitious savings programme, and higher than estimated costs of capital financing (borrowing),” the report stated.

“Should this position materialise at the end of the financial year the council would be required to use the General Fund to cover the overspend.”

The report listed a number of pressures facing the council which were driving the overspend:

• £2.2m – higher than budgeted costs associated with capital financing. • £1.7m – pressure due to the higher costs of children’s placements. • £1.3m – pressure in culture and leisure due to unachieved savings related to the delay with Peterborough Culture, Heritage, Learning and Leisure (PCHLL). • £1.6m – in relation to challenges delivering efficiencies in respect of Peterborough Limited, coupled with additional contract costs in respect of the increase in National Insurance Rates. • £1.2m – due to the use of agency staffing in Children’s Social Care and Clare Lodge. • £0.9m – forecast underachievement against the procurement savings target

The Dedicated Schools Grant (DSG) was also forecast to overspend by £10.1 million, due to growth in demand for Education Health Care Plans and the resulting growth in requirement for education provision.

This overspend would result in a £13.7 million DSG deficit at the end of 2025/26, according to the report.

The council recently introduced a 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 £3 million.

Despite this, the current forecast still leaves the authority’s reserves vulnerable with balances reducing to just below £19 million (excluding the DSG Deficit), of which £4.2 million is ring-fenced for specific use.

The budget control report stated: “Focus firmly remains on managing pressures and sourcing mitigating solutions, efficiencies and savings in both the current and future year to improve the financial position.”