Peterborough City Council is set to receive a huge Government bailout after its finances suffered during the pandemic.
The Government announced this evening (February 10) that four councils – Eastbourne, Bexley, Luton, and Peterborough – are to receive taxpayer bailouts after being “unable to balance their budgets”.
Robert Jenrick told MPs that a “handful” of authorities are facing serious financial challenges, either due to “very poor management” or the impact of the Covid-19 pandemic.
As part of the deal, Peterborough Council will receive £4.8m in taxpayer money during the 2020/21 financial year to support with this its Covid-19 related costs, and up to £20m for 2021/22 through the awarding of a Capitalisation Direction.
He did not confirm the identities of the four authorities receiving extra support when speaking in the Commons but the four councils were later named by the Ministry of Housing, Communities and Local Government.
Councillor John Holdich, leader of Peterborough City Council, said: “We are delighted with the positive response we have received from MHCLG to our request for exceptional financial support. In allowing us a Capitalisation Direction, they are acknowledging that the council has done everything it can to deliver much-needed services efficiently. This includes the implementation of a financial recovery programme and an extensive review of our services and contracts to ensure they are achieving best value.
“It’s clear that they understand Peterborough’s unique challenges and have trust in our assessment of our position and our ability to run an effective council.”
Councillor David Seaton, the city council’s cabinet member for finance, added: “We can now put forward a balanced budget, and in addition this gives us a solid basis on which to continue discussions with Government on its plans for future funding for the sector. That is the key to truly sustainable funding for our ambitious and forward-thinking city.”
Through the bailouts Luton Council will receive the largest bailout, valued at £35m during the 2020/21 financial year, while Bexley will receive £3.87m.
Eastbourne Council will receive £6.8m from the taxpayer for the 2020/21 financial year. It will then receive a further £6m the following year. Eastbourne Council has lost around 60% of its revenue, largely due to the lack of tourism during the pandemic.
Speaking as MPs considered local government finance motions, Mr Jenrick said: “We know that a handful of councils face serious financial challenges.
“Some, it has to be said, due to very poor management, but others due to the exceptional events of the past year. There is quite a broad range.
“Today we’re publishing details of the targeted support we’re providing to four councils unable to balance their budgets without an additional recourse to Government.
“This aid is provided on an exceptional basis, with these councils subject to rigorous reviews of their financial positions, their governance, ability to meet some or all of their budget gaps for the next year without Government funding.
“Taxpayer support of this kind is never provided lightly and in return for the increased flexibility afforded to councils next year, we expect sound financial management with residents shielded from unaffordable increases.”
He added: “I wish I could say that here in our nation’s great capital that the Greater London Authority is blazing a trail others might wish to follow, but sadly the opposite is true.”
Mr Jenrick also confirmed he has “reluctantly” met a request to allow a near-10% council tax rise in London without the need for a referendum.
He said the final decision rests with Mayor of London Sadiq Khan and urged him to “abandon this ill-judged pursuit of tax hikes and behave responsibly”.
A referendum is usually required if councils propose raising the tax by 2% or more.