The new North Yorkshire Council is set to face a £30 million shortfall in its first year, despite increased funding from government.
Michael Gove, Levelling Up Secretary, unveiled £60 billion worth of funding for councils across the UK on Monday — a 9% increase on last year.
The council is set to receive an additional £22 million from government as part of the announcement.
However, soaring inflation and the impact of the covid pandemic is still set to leave a blackhole in the authority’s finances.
A council press release said the shortfall would be met “by the one-off use of reserves as well as some savings”.
Cllr Carl Les, Conservative leader of the council, said:
“We are faced with the biggest financial pressures which I have witnessed in all of the time I have been a member of the county council since I was elected more than 20 years ago.
“While the extra funding from the government is extremely welcome, it will still not be enough to alleviate the extraordinary challenges which we do need to tackle in the coming financial year.
“The pressure on budgets will be felt across all of the directorates which provide key services for the hundreds of thousands of people who live and work in North Yorkshire.
“However, we are committed to ensuring that we can continue to provide the best possible services to the public in the face of these immense financial challenges.”
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The new council, which comes into force on April 1, is set to inherit £18 million in deficits from the seven district authorities which will be abolished, including Harrogate Borough Council.
However, increased costs from inflation and growing demand on council services such as adult social care is expected to add an additional £50 million.
Authority officials estimated that, once government funding, council tax and savings are factored in, the council will have a shortfall of around £30 million.
In order to plug that gap, it is expected that the council will have to dip into its reserves and find savings from streamlined services.
A budget for the upcoming North Yorkshire Council is expected to be set in February.
