Local Government Reorganisation (1)

Launch of new council is ‘vital’ to help huge financial challenges

A new council covering the whole of North Yorkshire will help to protect some of the most vital frontline services for the public and cushion the biggest financial challenges ever faced in the county.

The launch of North Yorkshire Council, which will see the county’s eight councils replaced by a single organisation in the spring, has coincided with massive pressures on budgets for the public sector across the country.

Senior councillors on the county council’s decision-making executive will meet on Tuesday next week (January 24) 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 £30 million in its budget. 

However, the opportunity to streamline the way in which key services ranging from waste and recycling to education, highways and planning are delivered to the public is seen as essential to helping to tackle the growing demands on the new council’s finances.

The chance to create one organisation by merging eight authorities will help to prevent duplication of work and also increase economies of scale, such as for buying goods and services, and saving money to protect frontline services.

North Yorkshire County Council’s leader, Cllr Carl Les, said that the opportunity to drive forward a more efficient way in delivering services to make millions of pounds in savings will be “vital” in helping to balance the new authority’s budget.

By joining up services and maximising spending power its first few years, North Yorkshire Council is set to recoup between £30 million and £70 million, which will become annual savings.

Cllr Les, who will assume the leadership of North Yorkshire Council from April 1, said: “We are facing the greatest ever financial challenges in North Yorkshire, which means we have a huge task in ensuring that 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 that 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 long-awaited devolution deal.

However, it is estimated that there will be a shortfall of more than £30 million in the new council’s revenue budget for the next financial year, all of which will have to be covered by the one-off use of reserves after some additional savings are also set to introduced. In the longer term, the financial gap is expected to widen and will need to be met by additional savings.

The new council will be working on a detailed plan for a major strategy to balance the authority’s books, although the financial challenges come in the wake of a decade of austerity measures from the Government.

A capital budget of £323.8 million, which is used to oversee longer-term projects such as roads and schools, over the next four financial years to 2026/27 is also facing huge pressures from rising inflation, and the situation is being monitored closely by senior council officers.

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

The proposed budget for the new council would see a rise of council tax of 4.99 per cent in North Yorkshire to counter the financial challenges, equating to an increase of £83.64 for an average Band D property. Chancellor Jeremy Hunt announced in his Autumn Statement in November last year that councils will be given the power to increase council tax by up to five per cent, including additional social care funds.

However, the county council’s deputy leader, Cllr Gareth Dadd, who is the executive member for finance, said he was acutely aware of the financial pressures that households in North Yorkshire are facing, and every effort would be made to ensure that they are given the support they need.

For instance, a new policy will be adopted by North Yorkshire Council which means households in the greatest financial need will be given up to 100 per cent reductions on council tax bills. The move has brought together different approaches currently used by district and borough councils to provide a single policy to cover the whole of North Yorkshire.

Significant overspends are already being reported in each of the county council’s service directorates. For instance, the health and adult services directorate is being faced with huge pressure from increased demand, especially for adult social care as well as inflation, and its existing £7.9 million in contingency funding has already been allocated.

The new North Yorkshire Council, which launches on April 1 to cover the whole of the county, will see an increase of £22 million in additional funding from the Government in the 2023/24 financial year, principally to respond to the massive increase in social care costs and to assist in getting people out of hospitals more quickly.

The scale of the new North Yorkshire Council’s operations will see it have an overall spend of about £1.4 billion, including £343 million on schools. If executive members agree the proposed budget, it will be considered at a full council meeting next month (February).