Cash strapped council budget overspend rises

The budget overspend is predicted to rise, the city council has warned

Peterborough City Council's predicted budget overspend for the current financial year has risen by £900,000.

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

It comes just one month after the council's cabinet member for finance Mohammed Jamil said he was "confident" a balanced budget could be achieved by February.

The report, which will go before a scrutiny committee on Thursday, 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. These include higher costs in children's placements, use of agency staff in children's social care and the increase in national insurance rates.

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

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."

"The overspend is primarily being driven by delays to delivering the ambitious savings programme," a report said

The council is run by a coalition of Labour, Liberal Democrats and the Peterborough First group.

Opposition parties have criticised the increase deficit. Imtiaz Ali, the city's Green Party budget spokesperson, said they were "very disappointed with the news".

"It's somewhat unsurprising to see that the main driver of this is the higher costs of children's placements and use of agency social workers. Procurement savings have also been difficult to achieve and we would encourage the council to prioritise this area given the large spend in question."

He also said he believes the council should run it's own children's homes. "We feel that with costs going up, third party providers will always protect their profits and pass on any increases to the council."

Former council leader, Wayne Fitzgerald, who leads the Conservative group, said the council needs to "cut costs and make savings. I don't believe the current administration is willing to do this."

"When I was leader I was prepared to make those difficult decisions."