£30m budget shortfall forecast for new council

Civic leaders have warned the new North Yorkshire Council, which will see the county’s eight councils replaced by a single organisation in the spring, will face difficult financial challenges once it comes into being.

Senior councillors on North Yorkshire County Council’s decision-making executive will meet on 24 January to discuss a proposed budget for the new authority.

Despite an increase in funding from the Government, the new authority is set to start the next financial year from April with a predicted shortfall of more than £30m in its budget.

But creating one organisation from eight merged authorities is expected to help prevent duplication of work and also increase economies of scale, such as for buying goods and services, saving money to protect frontline services.

Council leader Councillor Carl Les said by joining up services and maximising spending power its first few years, North Yorkshire Council is set to recoup between £30m and £70m.

Cllr Les, who will assume the leadership of North Yorkshire Council from 1 April, said: “We are facing the greatest ever financial challenges in North Yorkshire, which means we have a huge task in ensuring services can be delivered effectively and efficiently for the public.

“However, without the opportunities presented with the launch of the new council, the situation would be a great deal worse, and it is vital we take full advantage of these opportunities.

“We have the chance to make millions of pounds in savings by reorganising the way services are delivered, meaning that we get the most out of every pound of taxpayers’ money in North Yorkshire.”

The new council will be launched when North Yorkshire County Council and the existing seven district and borough authorities merge in the biggest shake-up of local government since 1974 to pave the way for a devolution deal.

The £30m shortfall will have to be covered by the one-off use of reserves after some additional savings are also set to introduced. The new council will be working on a detailed plan for a strategy to balance the authority’s books.

A capital budget of £323.8m, which is used to oversee longer-term projects such as roads and schools, over the next four financial years to 2026/27 is facing pressures from rising inflation.

Council tax is now the most important source of funding for council services in North Yorkshire, and each 1% increase would raise more than £4m towards meeting rising costs and demand.

The proposed budget for the new council would see a rise of council tax of 4.99% in North Yorkshire to counter the financial challenges, equating to an increase of £83.64 for an average Band D property.

The new council will see an increase of £22m in additional funding from the Government in the 2023/24 financial year.

The authority will have an overall spend of about £1.4bn, including £343m for schools.

If executive members agree the proposed budget, it will be considered at a full council meeting next month.