Rising social care and homelessness costs leave Peterborough council £3.7m over budget

The cash-strapped authority, which needed ‘exceptional hardship’ support from the Government earlier this year, said it is reporting in-year losses of £1.49 million due to increased adult social care demand and £2.36 million for an expected rise in placements for looked after children.

In addition, there is a forecast extra £1.2 million cost due to the use of hotels as temporary accommodation, and a £1.6 million loss of parking income.

The predicted overspend of £3.7 million comes just two months into the financial year with the council already forecasting a deficit of £26.8 million for 2022/23.

By law, local authorities are not allowed to prepare budgets which are expected to see it run a deficit.

The council was allowed by the Government to borrow £20 million to cover its deficit earlier this year in return for an independent review into its financial management.

Moreover, the council’s auditors recently warned that the authority faces an “unsustainable financial challenge” which if “left unmitigated” will see it at “significant risk of issuing a Section 114 notice” which would prevent expenditure beyond the funding of statutory services such as social care.

The forecast £3.7 million overspend during the current financial year is three per cent of the council’s overall budget.

In a newly published report, the council said the coronavirus pandemic has had a “significant impact” on its financial position by adding “an additional layer of financial complexity and uncertainty”.

According to its calculations, the pandemic has cost it £30.2 million, and while this has been more than offset by £32.3 million in additional government funding, the council said: “The significant needs of our communities, resulting in significant financial pressures as a result of Covid-19, will be long-lasting.”

The council recently set up a £15 million reserve fund to mitigate the long-term costs of the pandemic.

The extra £1.49 million pressure for adult social care is said to be because of “rising service demand, support for the care market and additional staffing costs to ensure the backlog created over the pandemic is reviewed”.

The £1.2 million pressure on the housing service relates to “the cost of using hotels and B&Bs, and associated security and maintenance costs”.

The Peterborough Telegraph recently revealed that 98 homeless households in Peterborough were currently being accommodated in hotels - more than a year after the council stopped relying on them for temporary accommodation.

There has been some more positive news, though, in relation to business rates income which is expected to increase by £2 million, while recovery action has reduced debt from £11.5 million at the beginning of April to £9.6 million.