Peterborough City Council to borrow extra £25m to plug budget shortfall

Peterborough council said funds from government and taxes was "insufficient"

A council has been given permission to borrow £4.8m this year and a further £20m in the next financial year by the government.

Peterborough City Council said the money for 2020-21 would to help with costs related to Covid-19.

It plans to borrow £13.7m from the £20m loan facility to plug a shortfall in the £187.2m budget for 2021-22.

Conservative council leader John Holdich said the government "understand Peterborough's unique challenges".

Labour said the government had underfunded Peterborough City Council for "years".

The council said it had been "operating within an extremely challenging financial position".

It said funding from government, council tax and business rates was "insufficient to meet the demand for services from a growing city".

The council said it needed funds this year because of extra costs causes by Covid-19

Last year, the council said its budget shortfall would treble to £33m, but that had now been reduced.

The authority said it had collected more tax and rates than expected, had increased funding, proposed a council tax increase and made more savings, leaving a £13.7m shortfall, which will be covered by the loan.

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The Ministry of Housing, Communities and Local Government has granted the council a "capitalisation direction", allowing them to borrow from the Public Works Loan Board for day-to-day running costs.

Normally, councils can only borrow money for investments or capital projects such as building work.

It means the council can avoid declaring bankruptcy or making large budget cuts.

Mr Holdich said the government had acknowledged "the council has done everything it can to deliver much-needed services efficiently".

Shaz Nawaz, leader of the Labour group on the council said the government was to "blame" for the financial situation.

Money from the government for the authority has reduced "year-on-year", and "better funding is what is needed going forward," he added.

Both the council and local MPs said that Peterborough had challenges caused by its rapid growth

The council was still predicting budget shortfalls for the next three years, partly due to increased costs of adult social care and children's services.

Paul Bristow, Conservative MP for Peterborough, said the city "faces unique challenges associated with rapid growth".

"This extra support would not have been available if it was not recognised that Peterborough is a well-run city," he added.

A full council meeting will be asked to approve next year's budget on 3 March.