Peterborough council seeks permission to borrow £9m for redundancies and ‘transformational activities’

An application has been made to the Government by Peterborough City Council as it seeks permission to borrow £9 million for redundancies and ‘transformational activities’.

By Joel Lamy
Monday, 17th February 2020, 5:01 am

In January, the cash-strapped council asked the Ministry of Housing, Communities & Local Government for permission to pay off the sum over a 20 year period, rather than as a one off hit which would require the authority to use its reserves.

Senior figures at the council including leader Cllr John Holdich and chief executive Gillian Beasley were also able to lobby Minister for Local Government and Homelessness Luke Hall for an hour recently - thanks in part to the support of city MPs Paul Bristow and Shailesh Vara - and there is a high degree of confidence that government approval will be granted.

The Conservative-run council recently carried out a voluntary redundancy programme which will see the loss of 18 roles.

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But both the costs of the redundancies and other “transformational activities’, for example changes to the provision of social care, will cost millions of pounds up-front.

Normally the council would be expected to pay the £9 million figure now, but the Government under exceptional circumstances can allow it to borrow the money over a longer period (under a process known as a Capitalisation Direction.

Should this be granted by the end of March, as the council expects, then it will mean borrowing £566,000 in the next financial year, with the figure subsequently rising to £632,000 a year.

If the Government decides to refuse the application then the council will need to pay the £9 million from its reserves, although it will not have to take out a loan.

The authority on Friday set out a series of measures to tackle its large budget deficit.

Savings of more than £39 million need to be made for 2020/21, although proposals to wipe out £24 million of that deficit were agreed by councillors back in January.

Cllr Holdich praised the “tremendous co-operation of staff” in helping to identify savings.

Councillors will vote on the proposals next month.