'Work underway’ to boost Peterborough council’s inadequate reserve levels after £50m drop in 2 years

The council overspent on its revenue budget by £5 million in the 2024/25 financial year.

A report put before the cabinet on June 17 stated it was “imperative” that an overspend was not repeated this year and revealed that reserve levels dropped by £50 million since 2023, from £70 million to around £20 million.

Speaking at the meeting, deputy leader and cabinet member for finance Cllr Mohammed Jamil, said: “I recognise this is not the position we would like to be in but it is a much-improved position from July last year.

“We’ve had to use our general fund reserve to cover this overspend, which I’ve got to point out leaves our reserves in a weaker position and below the required level.”

Higher interest rates than anticipated and delays in asset disposals were among the reasons blamed for the council’s financial position, as well as the fact that only 68 per cent of the authority’s savings programme was achieved last year.

Cllr Jamil noted the poor savings delivery reflected the “ambitious nature” of the savings and admitted that this year’s savings would be “equally ambitious”.

Demand for children’s social care placements, housing and home to school transport put “more strain” on the council’s costs, the cabinet meeting heard.

Overspends included £3.2 million on children’s social care placements, £1.7 million from pressure across leisure services, £1.7 million through a rise in homelessness, and £1 million on demand for home to school and children in care transport.

These overspends were offset by several underspend areas and savings delivery.

It stated in the cabinet report that a delay in a large asset sale in March had a “detrimental impact” on the financial position as the authority expected to bring in £23.7 million from asset sales, but only achieved £10.3 million.

Also of significant concern was the Dedicated Schools Grant (DSG) overspend by £5.8 million, which the council said was mainly due to the rise in expenditure within the high needs block.

Cllr Jamil said the council’s financial situation remained “difficult” going forward, with low reserves and high levels of borrowing.

However, he thanked council staff for helping to bring down the overspend from £11m to £5m and said to “keep up the good work”.

Peterborough City Council’s corporate performance report for 2024/25 was also discussed at the meeting.

Leader Cllr Dennis Jones highlighted that 41 per cent of key performance indicators did not meet their target last year.

These areas included an increase in fly-tipping, a reduction in the percentage of household waste being recycled, and an increase in the percentage of children who are overweight or obese.

Cllr Jones said that while improvements were being made in various areas such as prevention, independence and resilience, “several challenges” remained.