Coronavirus: ‘Radical’ restructure put on hold as council prepares to chase up tax debt through courts

The authority was expecting a £14 million deficit for its 2021/22 budget, and earlier this year it had outlined savings of £11.9 million through changes in how it operates services.

But those plans have been completely thrown out the window by the current crisis, with the deficit now escalating to £36 million and the council pleading to the Government for urgent help.

The deficit is expected to be a similar amount in future years.

Council corporate director for resources Peter Carpenter said the authority has been hit by £38.9 million of Covid-19 pressures and has so far received £27.9 million of government support.

However, he warned that “without additional funding this gap will deplete reserves to an unsustainable level”.

The council has been speaking to the Ministry of Housing, Communities and Local Government about short-term funding, with the Government engaging in those conversations over the past month, Mr Carpenter said.

Among the suggestions put forward by the council to the Government to cover its deficit are:

. Providing additional funding for “exceptional” Covid-19 incurred costs

. Allowing the council powers to use debt financing to cover one-off Covid-19 issues in 2020/21

. Allowing the council to take a one-year holiday in 2021/22 on re-paying its loans, saving £15 million

. Allowing the council to take a one-year holiday on Pension Fund payments which would “have no impact on staff pensions currently or in the future, but would free up in the region of £6-8 million”.

The council said it is awaiting a response from Government on its suggestions - some of which have previously been revealed by the Peterborough Telegraph - but that without further government funding it cannot wipe out its deficit.

Legally, councils cannot budget to make a loss over a financial year.

The “radical restructure” was a response to the council seeing its government funding reduced by more than 70 per cent (£58 million) since 2013/14.

This included using fewer people and more automaton, but Mr Carpenter noted: ”All that was put on hold as we needed the people (because of the pandemic).”

The potential saving of £11.9 million from the restructure has now dropped to £2.7 million, he added.

There is also further economic uncertainty with the Government’s furlough scheme about to end.

Mr Carpenter said: “The new furlough scheme will not be as generous. Will companies keep people on or make them redundant?”

People who are moved onto Universal Credit will qualify for council tax support, while each person on benefits costs the local authority approximately £330 a year.

Currently, 8,000 people in the city receive council tax support, an increase of 365 in recent months.

Moreover, the council will now begin to chase up council tax and business debt with the first court hearings scheduled for next month.

Mr Carpenter said the authority has not collected income of more than £17 million, of which Peterborough’s share would be around £10 million with the rest going to the Government.

On top of that, £5.5 million in planned savings for the current financial year have now not been met.

This included savings from adult social care, home to school transport, business support and renting out a further floor at its Sand Martin House offices.

No decision has yet been made on how much council tax could increase by from April.

Further budget articles will appear at www.peterboroughtoday.co.uk.