Subscribe to trusted local news
In a time of both misinformation and too much information, quality journalism is more crucial than ever. By subscribing, you can help us get the story right.
- Subscription costs less than £1 a week with an annual plan.
Already a subscriber? Log in here.
23
Aug
‘We’re heading toward an iceberg’: Opposition councillors' fears over council’s ‘worsening’ finances
Opposition North Yorkshire councillors have warned the council is “heading toward an iceberg” amid a “worsening situation” for its finances.
This week, Cllr Gareth Dadd, the executive member for finance on Conservative-controlled North Yorkshire Council, said this week the council would have to spend £57 million of its reserves by March 2028 to cover cumulative deficits.
Cllr Dadd also said the authority faced a "worsening situation" following an impending government fairer funding review.
“We are heading toward an iceberg”
The figures have sparked concern among opposition councillors, who have called on the current Conservative administration to get a grip on the situation.
Cllr Peter Lacey, leader of the Liberal Democrat group on the council, warned that the council is “heading towards an iceberg” if it did not address underlying issues with its finances.
He added that the Lib Dems had proposed funding for prevention schemes to help stem demand on the council’s children’s services — which is forecast to overspend by £10.4 million this year, according to a council revenue report.
Cllr Lacey said:
Our concerns regarding council finances under this Tory administration are many. First. that we see repeated examples of key service areas potentially being starved of cash due to capital over-runs and contingency set-asides. Prudence is one thing, but we’re heading toward an iceberg and the current approach is simply putting off the day rather than addressing the underlying issues.
Which brings me to our second major concern. We see from the council’s performance papers that one of the main financial pressures comes from increasing demand for people with complex needs. In the budget setting process for this year the Liberal Democrat and Liberal group therefore called for a concerted effort, and the resource to go with it, to be made on prevention and slowing down this inexorable growth in demand.
The ruling Conservative group has laid much of the blame over the council’s finances at the feet of the Labour government.
In November, ministers announced that the rural service delivery grant, which amounted to £110 million in annual funding for rural councils, will be stopped as part of a review.
North Yorkshire Council received the greatest share nationally of the grant, with £14.2 million in funding each year.
Cllr Gareth Dadd, speaking at the 2024 LGA Conference in Harrogate. Pic: LGA Joe Outterside
Cllr Dadd warned the decision would leave rural councils in a “perilous financial state”. The council also sought to challenge the move in the High Court, but later dropped its case.
But Cllr Steve Shaw-Wright, leader of the Labour group on the council, said the council was still in receipt of £50 million in government grants and that there were measures the authority could take to raise funds.
He added that the council had also taken “too long” to harmonise services since taking over the six districts in 2023 — a move that was supposed to bring savings.
Cllr Shaw-Wright said:
We recognise the challenges of delivering services across such a vast and diverse area, but the geography hasn’t changed, only the issues have.
The council has also inherited a number of problematic legacies from the former borough and district councils, such as Alpamare, Harrogate Convention Centre, and the Scarborough football pitch. These continue to place pressure on resources.
The Labour group is concerned that the council has taken far too long to fully integrate the former councils into a single, efficient organisation — the very basis on which multimillion-pound savings were promised.
Cllr Shaw-Wright added there were areas which the council could make savings without "compromising essential services”, such as reviewing underperforming council-owned companies, implementing parking charges in areas which have free parking and prioritising core services which “have the greatest impact on residents”.
Kevin Foster, leader of Greens and Independent group.
In a similar vein, Cllr Kevin Foster, leader of the Green and Independents, said the council had to “get a grip” on its overspends.
He said:
We need to get a grip on any overspending and make sure money is being spent where it’s really needed. Services like social care, housing, roads, school transport and environmental protection aren’t optional extras, they’re essentials.
However, Cllr Tom Seston, leader of the Reform UK group on the council, was sympathetic towards the situation the ruling Conservatives find themselves in.
He said:
I don’t envy the position the Conservatives find themselves in. The Labour Party won power after 14 years of complaining about austerity. Since winning power they have ballooned a supposed £22bn black hole into a £50bn black hole and buckle under the slightest political pressure.
Councils are overwhelmed by statutory provisions that they can’t control and have trouble to budget for. This has been made worse by the Labour government increasing the National Insurance contributions that they need to make.
The whole system of government from top to bottom needs reform.
Councillors are now looking to the government’s review of local government finance which is expected to be revealed in January.
Cllr Stuart Parsons, leader of the North Yorkshire Independent group, said ministers had to provide clarity before councillors find out “what is actually in store for us”.
“Most severe budget round”
While the Labour government carries out its review into local council finances, officers at North Yorkshire Council have already sought to seek savings.
A revenue report due before Tuesday’s executive warned that the government’s review is likely to “result in less funding for North Yorkshire” and said work had already started to identify savings to help mitigate against changes to local government finance.
The report provides sobering reading for senior Conservative councillors, who were told on Tuesday that “without action” the authority faces dipping further into its reserves to cover cumulative deficits.
Cllr Dadd told the Stray Ferret previously that the council was not currently in a financial crisis, despite despite warnings that some councils face insolvency due to an end to statutory overrides next year.
However, the Conservative politician put it succinctly when describing the potential outcome of the government’s review:
The strong message is, be prepared for the most severe budget round that this authority and its predecessors has ever faced.
With council tax budgets due to be set for 2026/27 soon, and key services to be funded, the financial outlook is not looking good — but who is to blame, and what should be done, is contested.
0