Peterborough City Council faces £7.9m forecast overspend
A report has been published on the authority's financial position
Last updated 11th Sep 2026
Peterborough City Council is forecast a multi-million pound overspend on its revenue budget – but the authority is “confident” it can be reduced.
A report published ahead of a scrutiny committee meeting next week highlighted the city council’s financial performance for 2026/27 after quarter one (June 30, 2026).
It set out a £7.9 million forecast overspend on the authority’s £258 million net revenue budget, which the council said demonstrated the “significant and ongoing financial challenges” faced.
The report, written by head of finance Chris Yates and deputy s151 officer Emma Riding, stated: “The primary drivers behind this overspend are a number of key service pressures, most notably within Children and Young People.
“Should the overspend persist through to the end of the financial year, it will be necessary for the council to use the General Fund to address the shortfall.”
The council said it was maintaining a strong focus on financial discipline in response to the report.
“There is a continued emphasis on actively managing budget pressures and identifying mitigating solutions, as well as seeking further efficiencies and savings,” the report added.
“These measures are being pursued both for the remainder of the current year and for future years, with the objective of improving the robustness of the financial position.”
Some of the key cost pressures facing the council are a £5.2 million forecast overspend on children’s placements costs for children in care, £2.7 million in reduced income at Clare Lodge children’s home and £600,000 pressure from agency staff within children’s social care.
Councillor Mohammed Jamil, cabinet member for finance and corporate governance at Peterborough City Council, said: “We are currently predicting a £7.9m overspend on our revenue budget however we are confident this can be reduced.
“A key part of our forecasting is being able to understand the budget pressures early enough so we then have time to work on reducing them.
“The primary reason for our predicted overspend is within children’s services where we have seen not only an increase in the number of children in care, but also the cost of residential care placements.
“However, we have work in progress to mitigate this overspend. This includes continuing our work to recruit permanent staff in children’s services to reduce higher agency costs, improving occupancy levels at the council’s secure children’s home Clare Lodge.
“All options are being explored to limit use of residential care where it is possible and in the best interests of a child.
“Should this overspend remain at the end of the financial year, it would be necessary for us to use reserves which we must work hard to avoid.”
The city council’s Dedicated Schools Grant (DSG) from the government is also expected to be overspent by £16.6 million because of increased demand for Education Health Care Plans, leading to a greater need for educational services such as special and independent school placements and SEN funding for mainstream schools.
The government currently allows councils to separate DSG deficits from their main financial accounts.
According to the report, the Department for Education announced earlier this year that it intended to provide funding for 90 per cent of DSG deficits held at March 31, 2026.
The remaining 10 per cent and future accrued deficits will still be held under statutory override guidance until March 31, 2028.
In terms of council reserves, the report stated: “Although reserves balances have been boosted due to the application of the Flexible use of Capital Receipts Policy, the current forecast overspend still leaves them vulnerable with balances reducing to around £23.7 million (excluding the DSG Deficit), of which £6.8 million is ringfenced for specific use.”
Around £122 million of capital spend is forecast against the council’s £149 million capital programme and is likely to require around £53 million of borrowing, but this will be reduced with the application of capital receipts.