Harrogate hospital trust to record £22 million deficitHarrogate hospital forecasts £21 million deficitCouncil estimates £105m use of reserves to cover three years of deficits

North Yorkshire Council could be forced to use £105 million of reserves to cover deficits over the next three years.

The council is currently forecasting a shortfall of £25 million at the end of 2023/24.

The authority put the figure down to inflation, rising cost of utilities and taking on structural deficits from other district councils.

Officials had initially forecast a deficit of £30 million, but this has since fallen to £25 million due to savings on changing energy providers and falling fuel bills.

In February, the council agreed a “one-off use” of £30 million of its reserves to cover this year’s deficit.

However, despite the lower deficit, the council still faces being forced to dip into its reserves to cover rising deficits up until 2025/26.

Cllr Gareth Dadd, executive councillor for finance at the council, said:

“We can already see the benefits of creating one single council for North Yorkshire with the chance to make millions of pounds of savings in the first year alone.

“While this is good news for taxpayers in North Yorkshire, we do still need to be realistic as the situation can change with the major financial challenges and uncertainty that are continuing to affect the global economy.”

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The authority has estimated another £30 million shortfall next year, followed by a £45 million deficit in 2025/26.

According to a report due before councillors next week, the council estimates that it would need to use a total of £105 million to cover its shortfalls over the next three years.

Council bosses are expected to draw up plans to make savings in the coming years in order to offset any use of reserves.

A financial report before the council in February showed the authority had £285 million in “earmarked reserves”, which is used to “manage financial risk, commitments and support improvement and investment within service directorates”.

Gary Fielding, corporate director for strategic resources at the council, told the Stray Ferret previously that, despite the use of reserves, the council would still be in a good position to withstand another national event, such as a pandemic.

A report on how the council plans to make savings in the next financial year will be brought before senior councillors in February 2024.

North Yorkshire Council has reserves to ride out inflation, says senior official

North Yorkshire Council will have enough reserves to ride out another national event such as soaring inflation, a senior council official has said.

Gary Fielding, corporate director for strategic resources at the authority, said the council has planned for a “one-off use” of its reserves to cover a £30 million shortfall for the upcoming financial year.

The council is facing pressures from inflation, rising cost of utilities and taking on structural deficits from other district councils.

Around £18 million from the districts will be taken on by North Yorkshire Council, plus a further £12 million for an in-year shortfall.

As part of the budget plans, the county council will dip into its reserves to cover the financial blackhole.

Despite the use of reserves, Mr Fielding said he felt the council would still be in a good position to withstand another national event, such as a pandemic or soaring inflation rates.

He said:

“I think we are well placed to ride out the issues in the coming years.

“I would describe these times as unprecedented and that is after two years of covid.”

Part of the council’s shortfall is down to energy costs and pay awards.

Energy bills for North Yorkshire’s current eight councils stood at about £6 million in 2021/22, rising to £15.5 million for the current financial year.

They are predicted to rise to £31 million for the forthcoming financial year from April 1.

Meanwhile, inflationary pressures, including pay awards, previously accounted for an increase of about £19 million a year across the eight North Yorkshire councils.

However, the dramatic rise in inflation to more than 10% a year has seen £66 million having to be allocated to next year’s proposed budget to cope with the increase.

Mr Fielding pointed out that other councils were serving section 114 notices – a measure taken in dire financial circumstances.

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Thurrock Council, Slough Borough Council and Croydon Council have all issued such notices, which effectively declare the authority as bankrupt and ban any further spending.

However, Mr Fielding said he felt confident the council was not in that position.

He told senior councillors this morning:

“I am confident that we are not that organisation and will not be that organisation.”

‘Heavy heart’ over council tax hike

Senior councillors this morning recommended a 4.99% increase in council tax for the entirety of North Yorkshire.

The proposal, which would see a band D rate of £1,759.96 for the year, will go to councillors at the authority’s full council meeting for a final decision.

Cllr Gareth Dadd, deputy leader of the county council, said it was “with a heavy heart” that the authority had to propose an increase.

He said:

“As we sit here today I can see no alternative to that 4.99% increase.

“Every one per cent that we take off that equates to a loss of funding of £4.1 million year on year.”

The council is proposing the sum in order to meet costs for providing public services across the county.

It has also decided that council tax rates will be harmonised for the next two years – meaning taxpayers will pay the same sum across the county.

New budget amid coronavirus costs ‘not necessary’, says council

Harrogate Borough Council bosses have said setting an emergency budget is not considered necessary at this time, despite the authority facing a £15 million shortfall due to coronavirus.

Council officials have outlined a financial recovery plan as part of the authority’s response to loss of income as a result of the pandemic.

It comes as councils across the UK are warning that some may have to issue section 114 notices – an emergency measure in dire financial circumstances – and potentially cut services to deal with the financial gaps.

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Meanwhile, Leeds City Council recently warned that it faces £200 million costs amid the pandemic. Leader of the council, Judith Blake, said the authority may have to cut vital services in order to balance its books.

But, the borough council has said that any section 114 notice or mid-term budget is not necessary and it will monitor the situation.

Harrogate Borough Council’s cabinet will meet virtually again next week to discuss its financial recovery plan.

Council Virtual Meeting

In a report due before a cabinet meeting next week, Wallace Sampson, chief executive of the authority, will say that the council will review its 2020/21 budget and reserves as part of its recovery plan. It says:

“Across local government some councils are having to consider whether to produce a new mid-year budget or to issue a section 114 notice in the event that resources are unlikely to be sufficient to meet expenditure.

“However, at this time it is considered that neither of these actions are necessary, although the situation will be regularly monitored.”

The authority faces a £15 million shortfall due to loss of income on such things as leisure and car parking. A grant of £1.65 million was granted to the council by government to help with cash flow.

In an effort to tackle the deficit, senior officers at the authority have outlined a financial recovery plan which will go before senior councillors.

As part of the plan, council bosses will review the authority’s 2020/21 budget, reserves, investment plans and capital expenditure including borrowing.

Officers are expected to report more on the council’s financial position once the reviews are complete.

Meanwhile, the authority has already frozen all but essential spending and implemented a recruitment freeze on all but critical services.

It comes as both the district council and the county council face a combined deficit of around £57 million due to the pandemic.

What is a section 114 notice?

A section 114 notice means that a local council cannot set a balanced budget and new expenditure is banned.

Once a notice is served by the council’s chief finance officer, councillors and senior officials have 21 days to come up with a new budget to balance its books.

In 2018, Northamptonshire County Council was forced to serve two section 114 notices as it failed to tackle its spiralling spending which resulted in an estimated £70 million deficit. The council will now be scrapped in April 2021 and replaced with two unitary authorities.

Council commercial tenant’s rent free period to end

A rent free holiday for Harrogate Borough Council’s commercial tenants will not be extended beyond the end of June as the authority prepares to tackle a £15 million hole in its finances as a result of the coronavirus pandemic.

The authority gave 185 of its tenants three months rent free back in March as part of its response to the coronavirus pandemic.

While most local authorities decided to defer rents for local companies, the borough council opted to wave them completely for its tenants.

The decision, which was taken at an urgent cabinet meeting chaired by council leader, Richard Cooper, was revealed to cost taxpayers £200,000.

Some businesses received a double dose of public money with many applying for emergency government grants on top of a rent free period.

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At the time of the decision, a joint statement from Cllr Cooper and chief executive Wallace Sampson said the authority wanted to encourage others to offer support.

It said: “Our commercial tenants will be offered three months’ rent free and we’ll be doing all that we can to encourage other landlords in the district to consider what support they can offer their tenants.”

Now, the council has confirmed that the period has not been extended beyond the three month period as it faces a £15 million shortfall due to the coronavirus pandemic.

In an effort to tackle the deficit, senior officers at the  authority have outlined a financial recovery plan which will go before a cabinet meeting next Wednesday.

As part of the plan, council chiefs will review the authority’s 2020/21 budget, reserves, investment plans and capital expenditure including borrowing.

Officers are expected to report more on the council’s financial position once the reviews are complete.

Meanwhile, the authority has already frozen all but essential spending and implemented a recruitment freeze on all but critical services.

It comes as both the district council and the county council face a combined deficit of around £57 million due to the pandemic.

Councils to unveil plans to tackle coronavirus shortfalls

Council officials are expected to reveal recovery plans to tackle a £57 million shortfall facing North Yorkshire amid the coronacvirus pandemic.

Both Harrogate Borough Council and North Yorkshire County Council have been hit financially by the outbreak and racked up large deficits from tackling the virus.

The borough council faces an estimated shortfall of around £15 million due to loss of income from car parking and leisure during the lockdown.

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It had initially estimated a deficit of £10 million in April, but chief executive Wallace Sampson revealed the figure had increased just two weeks later.

In a report before cabinet last night, the council said it had received £1.65 million from government to support cash flow and had already put a freeze on non-essential spending and recruitment to tackle the deficit.

A financial recovery plan will be brought before senior councillors in July, which will outline how the council will address the shortfall further.

It comes as councils across the country have warned of job losses and cuts to services which will need to be made due to the cost of the pandemic.

In neighbouring Leeds, the city council has said it may need to cut 415 jobs and introduce an emergency budget in August as it faces an overspend of £200 million.

Richard Flinton, chief executive of North Yorkshire County Council, told senior county councillors that the authority faces a £42 million deficit.

Meanwhile, North Yorkshire County Council is expected to face a deficit of £42 million by the end of the year due to fighting the outbreak.

Richard Flinton, chief executive of the county council, told senior councillors earlier this month that the authority will have to take measures to address its finances.

Mr Flinton said, while the county council had been given £26 million in government support and will recover around £7.7 million in clinical commissioning group costs, it will still have to do more to tackle the deficit. He said:

“We are hopeful that the government will recognise the need for further funding.

“We will need to take measures ourselves to protect our financial position and we are calling on the government to help on some of those future income streams, particularly around council tax.”

Carl Les, leader of North Yorkshire County Council and finance spokesperson for the County Council Network, said he had told Chancellor Rishi Sunak about the financial state of local government and called for the same support as has been given to businesses.