Peterborough City Council’s budget overspend climbs to £6.1 million
Financial pressures are mounting as the council faces challenges.
Last updated 6th Nov 2025
Peterborough City Council’s projected budget overspend for the current financial year has risen to £6.1 million, nearly £1 million more than the £5.2 million forecast just three months ago.
The revised figure was revealed in the council’s second-quarter budget control report for 2025/26, which outlines continued financial pressures.
The council’s cabinet member for finance, Cllr Mohammed Jamil, recently expressed confidence that the budget could still balance by February 2026. However, the report, set to be reviewed by a scrutiny committee on 13th November, indicates significant challenges remain.
The council is facing a number of financial pressures contributing to the growing deficit. These include:
- £2.2 million in higher-than-expected costs for capital financing
- £1.7 million in additional costs for children’s placements
- £1.3 million in unachieved savings linked to delays within Peterborough Culture, Heritage, Learning and Leisure (PCHLL)
- £1.6 million in efficiency challenges for Peterborough Limited and increased contract costs due to National Insurance rate rises
- £1.2 million stemming from the use of agency staff in children’s social care and Clare Lodge
- £0.9 million in anticipated shortfalls in procurement savings
Additionally, the council’s Dedicated Schools Grant (DSG) is forecast to overspend by £10.1 million, largely due to the growing demand for Education Health Care Plans and subsequent costs for education provision. This could leave the DSG with a deficit of £13.7 million by the end of the financial year.
The council has introduced a ‘Flexible Use of Capital Receipts Policy’ to help protect reserve balances. This policy allows eligible income from asset sales, normally restricted to funding capital projects or debt repayment, to be used to support revenue projects focused on delivering savings or boosting efficiency.
If fully implemented, this measure could improve the council’s reserve position by £3 million. However, even with these efforts, the reserves are forecast to reduce to just under £19 million by the end of 2025/26, with £4.2 million of that total restricted for specific purposes.
The budget control report states: “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 report highlights that the council must use its General Fund to cover the overspend if it materialises by year-end, putting further strain on reserves.
The findings of the budget control report will be reviewed by the council's scrutiny committee on 13th November.