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11
Dec 2024
Deputy council leader warns of increased financial pressure after rural grant cut
The deputy leader of North Yorkshire Council has warned the council faces further financial pressures amid the loss of a key government grant.
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 rural services delivery grant with £14.2 million in funding each year.
But, the government described the current local government funding system as “outdated and inefficient” and said it was carrying out long overdue reforms.
It comes as the Ministry for Housing, Communities and Local Government set out funding details which includes “repurposing” several funds to redirect money towards more deprived areas
Cllr Gareth Dadd, Conservative deputy leader of North Yorkshire Council, said the decision will leave some councils in a “perilous financial state”.
He said:
We have a high population of older people and, given the pressures in the social care market, we are seeing financial challenges regardless of any link to deprivation.
The loss of the rural services delivery grant will have a major impact in North Yorkshire and has left us with a multi-million pound shortfall that will impact on our budget which is already under immense pressure.
The government has announced it is cutting the grant in advance of a spending review without considering the full impact on rural communities. I would urge the government to ensure that the spending review is carried out in a measured and considered way to allow all councils to receive the funding allocation that they deserve.
Cllr Dadd had previously warned that the government's budget proposals on National Insurance contributions and the increase in National Living Wage could have "very serious consequences" for the council.
The financial pressures which the council is facing has meant that the authority’s predicted annual deficit was about £90 million at the start of this financial year.
The shortfall has been compounded by the unrelenting demand for care of older people, working age adults, and children and young people.
Council officials have already cut services such as home to school transport in an effort to contribute £4.2 million towards £48 million savings over the next four years.
Meanwhile, the authority has seen soaring demand on its adult social care services.
Cllr Dadd told a recent Local Government Association conference in Harrogate that individual packages of care for more than £1 million a year are now becoming a “more regular feature” in North Yorkshire.
Due to the escalating demand and the cost of providing council services, it had been predicted that North Yorkshire Council would have an annual deficit of about £48 million by the 2026/27 financial year.
Angela Rayner, deputy prime minister. Picture: Twitter/X
The challenging financial situation is now set to deteriorate significantly with the loss of the rural services delivery grant, while councillors face difficult choices over savings for the next financial year.
Following the launch of North Yorkshire Council in April last year, a plan has been drawn up to achieve more than £40 million in savings – although this had still left the predicted £48 million annual deficit by March 2027.
However, Angela Rayner, Labour deputy Prime Minister, said the current funding system for local government was outdated.
In a press release, she said:
For too long councils have been let down by an outdated and inefficient funding system which has led to public services creaking and taxpayers’ money not being spent efficiently.
Whilst there’s no magic wand to fix what we’ve inherited, we’re taking the necessary steps to fix the foundations of local government by creating a fairer system and ensuring every penny is spent on the services so many people rely on every day.
The government said it will launch a public consultation next month, which will aim to “fundamentally improve the way the sector is funded”.
It added that it “will ensure the impact of rurality on the cost of service delivery and demand” is reflected in the public consultation.
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