North Yorkshire Council has accused central government of handing down one of the “worst funding settlements in the country”.
According to the council, they have been left with a £5 million deficit in their new budget after the funding settlement was announced. They said: “We are facing the multi-million pound shortfall after ministers have been accused of diverting financial support from rural communities towards towns and cities.”
The council executive will be considering the next financial year’s proposed budget on Tuesday next week. So far the proposal includes a 4.99% rise in council tax to help counter the deficit.
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They added that they had been given the “fourth worst core funding settlement in the country” following Herefordshire, Rutland and Shropshire.
Their core spending power is a measure of the resources available to North Yorkshire Council to fund essential services like waste collection, recycling, social care and road maintenance. It sets out the money which the council has through the finance settlement from the government, and is based off of the principle of a 4.99% increase in council tax.
The leader of North Yorkshire Council, Councillor Carl Les, said: “All councils across the country are facing immense financial pressures but the funding settlement which we have been handed by the government will mean that we are faced with an even tougher situation than we had expected.
“We are acutely aware that all of our communities are feeling the impact of the cost of living, and we certainly do not want to compound those pressures.
“However, we are now faced with a council tax rise of 4.99% to help to counter the multi-million pound shortfall which we are facing in the council’s budget for the next financial year. If we don’t push ahead with the 4.99% increase, the financial deficit will be even worse.
“The government has pledged to conduct a review of local government funding, and I would urge ministers to ensure that there is a fair deal for all local authorities, whether they are responsible for large rural areas such as ourselves or towns and cities.”
According to the council, the biggest pressures come from the loss of the rural services delivery grant from April 1, along with the rising costs of national insurance contributions. They said they received the greatest share of the grant, gaining £14.3 million a year.
This fund was designed to assist in providing services in rural areas, which can often be challenging.
Councillor Carl Les
In addition to the £5 million shortfall, the council is also struggling with increase social care costs for older people, adults, children and young people. With North Yorkshire being sparsely populated, with many small villages, the challenges in providing services are greater.
North Yorkshire Council spends more than £50 million a year on school transport, and the policy has already had to be revised after costs more than doubled since it was last reviewed in 2018-2019. The costs in North Yorkshire are more than three times higher than the average in England, due to the rural nature of the county and the distances covered.
In addition, every hour of social care in North Yorkshire’s rural areas can cost £5 more than in other parts of the country due to travel costs and longer journey times. North Yorkshire Council pays for more than two million hours of care for people in their homes each year.
With National Insurance contributions rising from 13.8% to 15%, the council predicts a £7 million shortfall, even with a £5 million grant from the government to cover the rising costs.
Deputy leader of North Yorkshire Council, Councillor Gareth Dadd, added: “We will carefully consider the budget proposals when the executive meets as we want to ensure that we are offering the very best value we can for our residents and businesses.
“However, we are faced with some very tough choices to try to balance our books. We are due to have to use our financial reserves to cover the deficit which means that once that money is spent, we cannot recoup it.”
After being considered by the executive, the proposed budget will be brought before the full council in February. The 4.99% increase to council tax, including the 2% precept for adult social care, will equate to an increase of £92.18 for the average Band D property, taking the total to £1,949.54 per year.
North Yorkshire Council said they had also drawn up plans to make a further £52 million in savings, with this leaving a predicted £34 million deficit by March 31, 2028.
The Ministry of Housing, Communities and Local Government (MHCLG), said: “We are injecting £69 billion of funding into council budgets across England to help them drive forward the government’s Plan for Change, including a £23 million increase for North Yorkshire Council.
“We know that councils have suffered from short-term solutions, which is why we are working hand in hand with councils to reform this outdated system and fix the foundations.”
In addition, they added that the rural services delivery grant did not account for need properly, and so it has been repurposed. They also said the £69 billion marks a 6% cash terms increase and 3.5% real terms increase in council core spending power when compared with last year.
They add North Yorkshire Council has been given an increase in core spending power of £23 million, for a total of up to £685.1 million, a 3.5% increase on 2024-2025. The MHCLG said they had announced £700 million in additional grants available to local councils, taking the total additional grant funding available to councils to £2 billion.
This includes a £200 million increase to the social care grant and £515 million further funding which will be made available at the final settlement to assist councils with the increase in National Insurance Contributions.
Finally, they said they guarantee no local authority would see a reduction in their core spending power in 2025-2026 after taking the increase in council tax levels into account.