In an interview with Room151, Cecilie Booth, executive director of corporate services and section 151 officer at Peterborough City Council, outlines how the authority has managed to overcome difficult political dynamics and an absence of collective responsibility in its battle to restore its finances.
Room151’s interview series with s151 officers is sponsored by CCLA Investment Management, whose work with local authorities dates back to 1961.
In a time of spiralling inflation and increased demand for council services, some local authorities’ financial sustainability seems to be deteriorating at an alarming rate. But this does not appear to be the case for Peterborough City Council, whose finances were in a precarious situation just 18 months ago.
In December 2021, an Independent Improvement and Assurance Panel was formally established at Peterborough following the publication of two independent reports which revealed that the financial challenges facing the council were “significant and urgent”. This assessment came as the authority was given a capitalisation direction of £1.2m from the government in February 2021 as it was unable to balance its books (the authority only used £0.8m of this sum).
However, talking to Room151, Cecilie Booth, executive director of corporate services and section 151 officer at Peterborough, highlighted that the council’s financial situation is “very different now than it was 18 months ago” when she first arrived at the council.
“There was a general view when in the market before I arrived that Peterborough was going to need another capitalisation direction in 2022/23. Extensive work had been undertaken to prepare a savings plan but it was recognised that some of those savings were aspirational. The savings were delivered in full, however, not quite in accordance with the original plan.
“We looked at a range of service areas which hadn’t been looked at before, so we quite comfortably were able to balance our budget for the last financial year without the need for a capitalisation direction,” Booth explains.
The financial improvement at Peterborough was noted by the panel in its latest report, which outlined that the authority has made improvements in both the way it manages budgets and in how it makes financial decisions, with the council reporting a £0.6m underspend on its 2022/23 revenue budget.
Lack of collective ownership
Booth states that when she first joined Peterborough in January 2022, the council had a “very, very ambitious savings plan”, which exposed it to “significant financial risks”. However, she highlights that the authority’s main problem was its lack of collective ownership over its financial challenges.
“My view is that everything to do with finance was owned by finance and delivered by finance. Anything to do with money, generally, other directors and other services would just go to finance to sort it out,” Booth explains.
The authority no longer operates in this way and instead, awareness as well as understanding of the budget-setting process is spread throughout the leadership team, she says. A key way of enforcing this was through implementing regular budget corporate leadership team (CLT) meetings on top of regular CLT meetings.
“We have a very close leadership team, we have collective ownership of our financial challenges, and we are quite open about them. We now have regular leadership team meetings where we discuss the financial position in quite a lot of detail and support each other in finding remedial action to get things back on track again,” she states.
In a recent blog on Room151, Geoff Wild, director of law and governance, consultant and interim manager, outlines that collective responsibility is integral for good governance and should be held by everyone at an authority.
Overcoming political issues
Booth adds that collective ownership of Peterborough’s financial challenges also spreads to members within the council, albeit something that was not easy to establish at the start of her tenure at the authority.
Currently, Peterborough is under no overall control and the “political dynamics” within the council have been identified by the Independent Improvement and Assurance Panel as a “major challenge” for the authority.
“Getting overall political buy-in to the budget setting process was quite a challenge at first,” Booth explains. “At my first council budget meeting in March 2022, members were proactively voting against the budget. Not just abstaining their votes, they were voting against it, without having an alternative budget to vote on.”
Booth tells Room151 that one of the ways in which she tackled this problem was by setting up an alternative budget working group at Peterborough, in addition to the cross-party Financial Sustainability Working Group.
“One of the first things that I did was to set up an alternative budget working group. So, if the opposition groups didn’t want to vote for the single budget, they at least would have an alternative budget to vote for and they could go for one or the other.
“This turned out to be quite successful as it became very clear that they didn’t want an alternative budget; they didn’t want higher or lower council tax increases than the referendum limit. It was more about having all their ideas in their own forum.
“I think they had probably been listened to before, but it was more difficult for political reasons. So, having just the opposition [parties] without the administration gave them perhaps a different or an improved level of confidence,” she says.
At this year’s council budget setting meeting only one member voted against the budget, with all other members of Peterborough City Council voting in favour or abstaining. This showed the “real and massive change” which has taken place at the authority, Booth says.
She also introduced several other initiatives which she says were “instrumental” to improving Peterborough’s financial situation. These included establishing a “very good finance team”, moving away from outsourcing arrangements, and introducing a medium-term financial strategy.
Not out of the woods yet
However, Peterborough is not out of the woods yet in terms of its finances, as the council still faces future financial uncertainty and must continue to manage the current difficult economic climate, a situation which also faces other local authorities in the UK.
This was highlighted in the Independent Improvement and Assurance Panel’s report, which stated that Peterborough still faces some financial pressures in its medium-term financial strategy, with the council currently predicting a budget gap of £5.1m in 2024/25, rising to £6.1m in 2025/26 and £10.5m in 2026/27.
Booth explains that holding people accountable for delivering agreed savings will be an important method for dealing with Peterborough’s medium-term budget gap. Bringing a halt to some services “that don’t support the council’s priorities anymore” is also an area that the authority is looking at to bridge the gap, she says.
The council has begun an ambitious programme to transform its services, with a series of portfolio boards linked to its corporate strategy being tasked with leading this area of work, Booth adds.
Concerns over debt refinancing
In addition, the report also outlined that Peterborough has £75m of short-term debt, which is due to be refinanced in the next 12 months. This comes as the Bank of England increased interest rates again last week to 5.25% in a bid to tackle stubborn inflation in the UK.
Booth says that although debt refinancing is a concern for her, the council has put in place an “ambitious asset disposal programme” to generate approximately £14m of capital receipts to pay off some of the maturing loans.
“However, some of it will have to be refinanced. The good news is that some of those loans are quite old. So, the rates are quite similar to the rates that are available in the market now.
“Also, I’m hoping to mitigate that additional pressure with doing some very short-dated borrowing, some internal borrowing and we’re working closely with our advisors to make sure that we minimise the impact of replacing the debt,” she adds.
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Governance issues
A key problem that still needs to be addressed at Peterborough is governance, Booth thinks, with the improvement panel’s latest report highlighting that the authority is yet to complete a specific strategic and governance framework.
This comes as recent high-profile examples have highlighted how the absence of good governance can lead to catastrophic results, such as the issuance of a section 114 notice.
“There are still issues that need to be dealt with around governance, in particular regard to our companies and commercial activity, although we haven’t got a lot of companies,” she says.
“We have got quite a comprehensive action plan for the things we need to do to improve governance around our commercial activity.
“I think we just need to tighten up on our processes and governance arrangements, but it’s nothing that directly or adversely affects our financial position.
“It’s worth mentioning that when you’re looking at some of the section 114 notices that have been issued in the past, we haven’t got a massive commercial portfolio, we haven’t bought the local shopping centre or provided big loans in the market.”
That has made Peterborough’s path to financial stability that much easier, but the turnaround overseen by Booth has nonetheless been significant – and points to a brighter outlook.
Room151’s interview series with s151 officers is sponsored by CCLA whose work with local authorities dates back to 1961.
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