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Jun 2022

Last Updated: 21/06/2022

Politics

North Yorkshire Council faces £50m black hole, says finance boss

by Stuart Minting Local Democracy Reporter

| 21 Jun, 2022

The new unitary authority, which comes into existence on April 1, could be saddled with £50m debt due to deficits it will inherit from district councils and high inflation.

North Yorkshire County Council's offices in Northallerton.

North Yorkshire County Council's finance boss has said the new unitary local authority is facing a possible black hole of close to £50 million a year.

Cllr Gareth Dadd, executive member for finance at the county council, said the situation was largely due to deficits it will inherit from district councils and high inflation.

Cllr Dadd said it was far too early for the authority, which will come into existence on April 1 next year, to be considering service cutbacks.

Due to the range of uncertainties facing the authority including the ongoing impact of covid, he likened setting the council’s budgets to “trying to juggle two bowls of jelly”.

He was speaking at a meeting of the Conservative-led authority’s executive where a move to top up a fund to cover the costs of local government reorganisation to £38 million was approved.

Although he did not estimate the total structural deficits that the seven second tier authorities, including Harrogate Borough Council, would have accumulated by the time the new council is launched in April, he said it was believed it would be “substantial”.

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However, it has been estimated the combined ongoing deficits of the district and borough councils could be in the region of £10 million.

In addition, ahead of the recent increasing inflation rate the county authority had been prepared to cover a deficit of up to £20 million.

With inflationary pressures, which include the council’s gas and electricity bill rising by some £3m, it is believed the total deficit could nearly reach £50 million.

Cllr Dadd told today's meeting:

“That is a frightening figure, but nonetheless, I think we are right to raise that at this stage.”

'Higher uncertainty and risk'

An officer’s report to the meeting said:

“As further savings are required the schemes to achieve these will become more challenging and inevitably contain a higher level of uncertainty and risk. Therefore, it is imperative that delivery of each saving is closely monitored.

“As well as direct costs, higher inflation will feed into increased charges from suppliers and put pressure on wage levels for our own workforce and the wider supply chain.

“Effective budgetary control will remain critically important in the coming year but this alone is unlikely to be able to stave off unanticipated price increases in delivering the range of council services.

“This is, of course, at the same time as undertaking key work in transitioning to the new unitary council.”

Cllr Dadd said while the authority had been successful in cutting costs during austerity, it would never be complacent about sound financial management.

The meeting heard the county council’s business case for local government reorganisation had provided for a £252 million saving over a five-year period after £38 million in costs were taken off.

Cllr Dadd said he would be astounded if all of the £38 million was needed for the reorganisation.

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North Yorkshire Council faces £50m black hole, says finance boss

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'Higher uncertainty and risk'