Peterborough City Council is navigating a challenging financial environment as it prepares to approve its 2026/27 budget and medium-term financial strategy. Despite governance improvements and multi-million-pound savings programmes, the council continues to face high debt, low reserves, and historic underfunding.
As part of the proposed budget, the council is recommending a Council Tax increase of 4.99%, the maximum allowable without triggering a public referendum, to help fund essential services while maintaining financial stability.
“Even if approved, reserves will remain insufficient for an authority facing such inherent risks and substantial net expenditure,” notes the council’s February 2026 budget report.
Financial pressures: Debt, low reserves, and historic underfunding
The council identifies three principal financial challenges:
- Low Core Spending Power (CSP): Historic underfunding has limited service quality and the council’s ability to meet local needs.
- Low reserves: Reserves have been further reduced to support transformation programmes, Children’s Services improvement, inflationary pressures, and revenue overspends.
- High debt levels: Borrowing stands at approximately £500 million, with annual debt servicing costs of nearly £40 million.
Even with these pressures, the council has applied for Exceptional Financial Support (EFS) from the Ministry of Housing, Communities and Local Government (MHCLG) to provide temporary relief, though the underlying financial vulnerabilities remain.
“The budget estimates are broadly realistic and deliverable, although not without risk,” states the council’s Section 25 Robustness Statement.
Reset, rebuild, redesign: Council’s strategy
To tackle these challenges, the council is implementing a three-pronged financial strategy: Reset, Rebuild, Redesign. This approach focuses on:
- Strengthening budget assumptions
- Rebuilding reserves
- Ensuring long-term service sustainability
The council report emphasises:
“While risks remain, the combination of strengthened financial management, strong governance, and delivery of transformation programmes will remain essential to maintain financial resilience.”
The Government’s Fairer Funding Review, confirmed in December 2025, is expected to improve Peterborough’s funding over the next three years, helping the council maintain a balanced budget through 2028/29.
Ambitious capital investment
The council is planning a £346 million capital programme over four years, focusing on:
- Peterborough Station Quarter redevelopment
- New leisure facilities, including a swimming pool
- Great Haddon Primary and Secondary School expansions
- SEND provision investment
- New Towns Fund projects
“The Asset Management Plan ensures that assets such as buildings, land, and infrastructure are aligned with the council’s service delivery priorities, financial sustainability, and long-term community goals,” the report states.
Funding will prioritise third-party contributions, with borrowing only used as a last resort, alongside careful treasury management to ensure long-term cash flow stability.
Public consultation: Clear priorities, limited impact
The council launched a six-week budget consultation from 14 October to 25 November 2025, inviting residents, businesses, and stakeholders to provide feedback on spending priorities, potential savings, and Council Tax increases above the national limit.
The consultation included:
- Online surveys (328 responses)
- Social media polls (1,991 responses)
- Direct engagement with community groups and stakeholders
- Hard copy surveys for accessibility
Key findings from residents included:
- Service priorities:
- Schools and education (including special educational needs)
- Adult social care
- Children’s social care
- Efficiency suggestions: Reduce executive pay, consultant fees, councillor expenses, and avoid “vanity projects” such as the Hilton Hotel and the Bridge
- Core services protection: Public health, housing, waste disposal, parks, libraries, and leisure facilities
- Council Tax: 26% support increases for improved services, 68% oppose, 7% unsure
- Investment priorities: 64% willing to pay more to protect swimming pools and leisure facilities; 35% prioritised support for children and families
“Feedback gathered during the consultation will be used to inform decisions on resource allocation, savings priorities, and potential Council Tax increases,” notes the council report.
Despite this input, there is little evidence that the consultation influenced final budget proposals. The draft 2026/27 budget considered by Cabinet on 10 February 2026 remains largely consistent with initial proposals, and scrutiny committees issued no formal recommendations.
Balancing investment with financial prudence
The council is acutely aware of ongoing financial risks, including low reserves, high debt, and increasing service demand. The Treasury Management Strategy and Asset Management Plan aim to ensure borrowing is responsible, investments are effective, and capital expenditure aligns with corporate priorities.
“Savings and investments are tracked through the Capital and Invest-to-Save Board monthly, with transformation progress tracked through the council’s four priority boards,” the report notes.
Education and SEND pressures remain a significant concern. While the Dedicated Schools Grant (DSG) for 2026/27 increases by £13.5 million, demand for SEND provision still outpaces funding, creating a deficit that must be addressed through borrowing.
“Although a strategy is in place and the Government plans to fully fund SEND from April 2028, uncertainty remains over how existing deficits will be handled,” the report states.
Is public consultation worthwhile?
Peterborough residents have voiced clear priorities through consultation, yet the draft budget shows the limited influence of public feedback.
While the council notes that consultation will “inform decisions on resource allocation, savings priorities, and potential Council Tax increases,” statutory requirements and financial risk management appear to dominate the final budget.
This raises the question: if public consultation rarely changes financial outcomes, is it truly effective?
The final budget will be approved by Full Council on 25 February 2026, setting the city’s financial direction for the next three years.
