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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.