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18
Dec 2024
North Yorkshire Council warns of 'very difficult choices' as local government funding settlement announced
North Yorkshire Council's deputy leader has warned of "very difficult choices for our budget" after today's local government funding settlement.
In a statement this afternoon, the Conservative-run council said the settlement for the next financial year had increased its shortfall by £6.5 million.
The deepening financial deficit comes amid increases in employer’s National Insurance costs and the axing of rural grants worth £14.3m per year in North Yorkshire.
Deputy leader and finance chief Cllr Gareth Dadd warned many rural councils had been left in a far more perilous financial state than urban councils.
He said:
We are extremely disappointed with the financial settlement which we have been awarded by the government.
It seems that rural councils are being left at a distinct disadvantage to their counterparts in more urban areas as ministers have taken the decision to target more funding towards towns and cities.
We simply cannot let this financial divide between rural and urban councils grow, as there needs to be a fair approach for local government funding across the whole country.
We are committed to providing the best value that we possibly can for North Yorkshire’s taxpayers, but we are now faced with some very difficult choices for our budget for the next financial year following the government’s funding announcement.
Rural funding blow
North Yorkshire Council received the greatest share nationally of the rural services delivery grant with £14.3 million in funding each year.
The £110 million package of funding for councils covering rural parts of England was a recognition from Westminster of the challenges of providing services across countryside communities.
But spending has been diverted to urban areas after ministers indicated deprivation will be a key driver for where money is allocated.
The Chancellor announced in the Budget in October that the rate that employers pay in National Insurance contributions will rise from 13.8 per cent to 15 per cent on workers’ earnings from April next year.
The decision left North Yorkshire Council facing an estimated £7 million shortfall, even with an estimated £5 million grant from the government to cover the rising cost of National Insurance contributions.
Once all aspects of the local government settlement are taken into account with some funding increases in specific grants, North Yorkshire Council has been left with an additional overspend of nearly £6.5 million.
The shortfall has been compounded by the rising demand for care of older people, working age adults, and children and young people.
The council spends more than £50 million each year on home to school transport and the policy has had to be revised after costs more than doubled since 2018/19.
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 has still left a predicted £58 million annual deficit by March 31, 2028.
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