Council tax hike proposed to tackle £5.2m shortfall

The city council will consult with residents over the proposed council tax increase

A cash-strapped council is proposing to increase council tax above the national limit to help tackle a projected overspend of £5.2m.

A cap limits annual rises to 4.99% unless a referendum is held or special permission is given by the government.

But a Peterborough City Council cabinet report states: "An additional £1.1m of income could be generated per 1% increase above the 4.99%. This is money we could use to protect services."

A public consultation is expected to be launched later this month.

The responses would help the council draw up budget proposals amid financial challenges, including a forecast overspend of £5.2m, according to the Local Democracy Reporting Service.

The report, which includes the council tax proposal, will be discussed at a meeting of the council cabinet on 14 October.

It states how "raising council tax above the national limit (with government approval) is one of the ways we are considering meeting our funding challenge in 2026/27".

In June 2025, the government launched its Fairer Funding consultation, which it says is an overhaul of the way money is allocated to councils.

Peterborough City Council hopes that could reduce its budget gap in 2026/27 to £2.3m.

The report adds: "At this stage, the forecast changes to funding are still an estimate and won't be confirmed until December 2025.

"Therefore, regardless of whether these estimates are accurate or not, we still have a budget gap in 2026/27 of £2.3m and we must plan for the eventuality that it may be as high as £9.3m."

The proposed consultation will also ask residents which services they would like to see get more funding if council tax goes up.