North Yorkshire Council faces £50m black hole, says finance boss

North Yorkshire County Council’s finance boss has said the new unitary local authority is facing a possible black hole of close to £50 million a year.

Cllr Gareth Dadd, executive member for finance at the county council, said the situation was largely due to deficits it will inherit from district councils and high inflation.

Cllr Dadd said it was far too early for the authority, which will come into existence on April 1 next year, to be considering service cutbacks.

Due to the range of uncertainties facing the authority including the ongoing impact of covid, he likened setting the council’s budgets to “trying to juggle two bowls of jelly”.

He was speaking at a meeting of the Conservative-led authority’s executive where a move to top up a fund to cover the costs of local government reorganisation to £38 million was approved.

Although he did not estimate the total structural deficits that the seven second tier authorities, including Harrogate Borough Council, would have accumulated by the time the new council is launched in April, he said it was believed it would be “substantial”.

Read more:

However, it has been estimated the combined ongoing deficits of the district and borough councils could be in the region of £10 million.

In addition, ahead of the recent increasing inflation rate the county authority had been prepared to cover a deficit of up to £20 million.

With inflationary pressures, which include the council’s gas and electricity bill rising by some £3m, it is believed the total deficit could nearly reach £50 million.

Cllr Dadd told today’s meeting: 

“That is a frightening figure, but nonetheless, I think we are right to raise that at this stage.”

‘Higher uncertainty and risk’

An officer’s report to the meeting said: 

“As further savings are required the schemes to achieve these will become more challenging and inevitably contain a higher level of uncertainty and risk. Therefore, it is imperative that delivery of each saving is closely monitored.

“As well as direct costs, higher inflation will feed into increased charges from suppliers and put pressure on wage levels for our own workforce and the wider supply chain. 

“Effective budgetary control will remain critically important in the coming year but this alone is unlikely to be able to stave off unanticipated price increases in delivering the range of council services. 

“This is, of course, at the same time as undertaking key work in transitioning to the new unitary council.”

Cllr Dadd said while the authority had been successful in cutting costs during austerity, it would never be complacent about sound financial management.

The meeting heard the county council’s business case for local government reorganisation had provided for a £252 million saving over a five-year period after £38 million in costs were taken off.

Cllr Dadd said he would be astounded if all of the £38 million was needed for the reorganisation.

County council vows to ‘chase savings’ ahead of new North Yorkshire authority

The leadership of North Yorkshire County Council has vowed to “chase savings” for residents and to bolster services from local government reorganisation as it launched an implementation plan to create a single authority for the county.

The authority’s finance boss and deputy leader issued the pledge ahead of its executive formally approving a blueprint which will be used to overcome a plethora of hurdles in reducing one county council and seven district and borough councils down to one single unitary authority.

Auditors’ analysis of the county council’s unitary plan has found it could save £30m a year by cutting red tape and reducing senior management and elected member costs.

In addition, by using the new council as a springboard for change, the auditors concluded savings could rise to between £50m and £67m a year, netting up to £252m at the end of the first five years, saving of up to £185 a year for households.

However, among the biggest concerns for residents before Vesting Day – the day the new unitary authority is launched on April 1 next year – will be how the council tax and other charges such as car parking and leisure centre fees are brought into line.

This year the district and borough councils’ element of the council tax charge ranged from Hambleton levying £165.83 to Harrogate’s £255.92 demand.

Read more:

Residents are also likely to see changes in the amount they are charged for services such as garden waste collections.

Outlining the scale of the challenge facing officers over the next ten months, county council chief executive Richard Flinton said the plan highlighted the need to collaborate with other organisations, including businesses and the voluntary sector, as it is “very easy at a time of enormous change to be very internal focused.”

He said the plan set out the vision of what the authority was trying to achieve and provided key objectives for senior officers, who would be in place for the unitary authority by autumn, to follow.

Cllr Gareth Dadd, executive member for finance, said one of the biggest drivers for local government reorganisation had been the potential savings that could be realised.

He said: 

“Through our usual budgetary processes I will be insisting that we chase not just the £30m, but £60m or £70m and more if we can get it.

“Whilst our priority at the moment must be getting to Vesting Day making sure all is safe and legal, after that we have got a job to do because by the end of this term in five years time we should be able to say we are well on the road to realising those savings.

“They may well be masked with austerity or left-field stuff coming forward,  but at least we should be able to prove we have set out to achieve and largely achieved what we intended to do by submitting that bid to government. There can be no rowing back from that, along with no rowing back from localism.”

Tories appoint leader for new North Yorkshire Council

Former service station owner and ex-butcher Carl Les has been selected to lead the new Conservative-run North Yorkshire Council.

The Catterick councillor faced no opposition from the 46 other Tory councillors at the North Yorkshire County Council Conservative group’s annual meeting at Northallerton Methodist Church Hall yesterday.

Cllr Les, 72, is the current leader of North Yorkshire County Council, which is being abolished along with the seven district councils, including Harrogate Borough Council, next year.

It means he will solidify his position as the most powerful politician in the Harrogate district and the rest of North Yorkshire.

Cllr Les’ name will be put forward as leader of the authority at the first meeting of its 90 elected members on Wednesday next week.

If, as expected, he is elected he will then go on to select councillors to serve on the authority’s decision-making executive.

It is not known whether any from Harrogate will hold senior posts. Harrogate-based Don Mackenzie, the executive member for access at the county council, did not seek re-election at last week’s election.

Harrogate Borough Council leader Richard Cooper also did not seek re-election and his deputy, Graham Swift, lost the vote in his division.

Read more:

Cllr Les has been at the helm of the county council since 2015, having sold his business Leeming Bar Services, near Bedale, to Moto the year before.

He has also played a leading role in a spectrum of influential bodies including North Yorkshire Youth, Welcome to Yorkshire, the Local Enterprise Partnership, Citizens Advice and the Police and Crime Panel.

Thirsk’s Gareth Dadd to be deputy leader 

After a challenge from a Conservative member who has not been named, the Tory group meeting saw Thirsk councillor Gareth Dadd elected as its deputy leader, a role which he has also held for seven years.

Gareth Dadd

Following the meeting, senior Tories said they hoped the decisions would end the district and borough councillor versus county councillor rivalries that have existed for decades within Conservative ranks in North Yorkshire.

Political commentators have described the pair as “pragmatic One Nation Conservatives who above all prioritise vulnerable people who are unable to help themselves”.

They have stated the top of their agenda is to ensure a smooth transition to the new unitary authority next May, squeezing out savings from the reorganisation and to get devolution.

The meeting also saw councillors Tom Jones, of Bedale, Tim Grogan, of Monk Fryston and South Milford, and Esk Valley member Clive Pearson appointed to serve as whips, acting as the leadership’s “eyes and ears” in the Tory group, which has seen its majority shrink by about 20 per cent.

When asked if the group’s whips would be busier due to the decreased majority, Cllr Les said:

“They will have work to do to make sure people are getting to meetings or whatever.

“Not only do we have a majority over all the other parties, albeit a slim one of only two, but not everybody who is not a Conservative is against the Conservative proposals. As I did for the previous five years I will be reaching out to other members and groups to work on a common agenda as we are all there to serve the people of North Yorkshire.”

North Yorkshire’s roadside litter branded ‘an absolute disgrace’

Local authorities in England’s largest county have been accused of allowing “corridors of shame” by failing to clear roadside litter.

A North Yorkshire County Council meeting today heard the cleanliness of many verges, ranging from the A1(M) to country lanes, branded “an absolute disgrace”.

The meeting was told although there appeared to be a rising tide of takeaway wrappers and human waste being thrown from vehicles, some roadsides in the county had not been cleared for at least 15 years by district and borough councils, despite them having a statutory responsibility to clear it.

Members were told the main challenge to clearing roadside litter related to safety.

Amanda Dyson, Richmondshire District Council’s waste and street scene manager, said the authority was constrained by safety issues and having to work when Highways England was carrying out road repairs.

She said because safety rules meant single carriageway A-roads could only be cleaned at night, the cleaning was dependent on council staff volunteering to work night shifts to deal with often unpleasant litter, such as bottles of urine.

Ms Dyson said:

“We have calculated there could be huge costs involved if we were to do this.”

Read more:

Chris Brown, a parish councillor from Newsham, close to the A66, said National Highways had declined to accept responsibility for cleaning the A66, as it has for other major roads elsewhere, before suggesting the Department for Transport could resolve the issue.

Members were told the DfT had stated cleaning roadside litter was not its responsibility and referred campaigners to the Department for Environment, Food and Rural Affairs.

No confidence in council officers making a difference

Defra had simply replied to Coun Brown that there was unlikely to be any significant change to the bodies responsible for clearing roadside litter for the foreseeable future, the meeting heard.

Coun Brown said he had no confidence senior council officers were determined to make an immediate difference, adding:

“Do local residents and people who travel through the area continue to have to travel through what I call the corridor of shame? It looks like the side of a landfill tip in parts.”

The meeting heard councillors call for a county-wide strategy and action, saying the roadsides of North Yorkshire were poor in comparison with those in neighbouring council areas such as County Durham.

County council deputy leader Councillor Gareth Dadd said while the authority’s executive was currently restricted to raising roadside litter concerns with the district and borough councils responsible for clearing it, it was “an issue that could be looked at with a little more depth and seriousness” by the unitary North Yorkshire Council after it is launched in May 2023. He added:

“As with any aspiration or desire it will come with a price tag, and that will have to go into the mix with the other priorities and challenges everybody has.”

Council predicts loss-making Brierley Group will return to profit

North Yorkshire County Council is predicting its trading arm will bounce back into profit this year after reporting significant losses.

The county council’s leadership has said while the overall profits of The Brierley Group remain lower than anticipated, the in-kind “shareholder value” of the companies to the public purse in the year to April, through savings, would be almost £6 million.

A meeting of the shareholder committee of the council, which has embraced a “culture of commercialism” to help protect frontline services, heard The Brierley Group was forecast to recorded turn last year’s £639,000 loss into a £268,000 profit for the 12 months to April.

Officers told the meeting the three months to September last year had seen “lots of ups and downs” so across the group after tax there had been a loss of £330,000 for the quarter, against a budgeted loss of £1,000.

They said the main reasons for the loss was the impact of covid-19 and struggles to retain staff.

Officers said while its educational services firm had been hit by unpredictable uptake of school meals, making it impossible to achieve the necessary economies of scale, he firm was looking at innovative ways of working “to build on that commercial success as we move into a post-covid world”.

The meeting heard roadworks company NY Highways, which launched in June last year, was set to generate a small profit, and its property services firm Align profits were expected to exceed budget and be ahead of pre-covid trading, while internet service firm NYNet had also seen a strong performance.

Read more:

However, councillors were told as its property developer firm Brierley Homes had three sites under construction at Pateley Bridge, Millwright Park and Marton cum Grafton, the group’s overall figures were being skewed by the length of time it would take to generate profits.

The meeting heard there had been challenges over getting labour and materials, which had hit the schedules, but the sites would start generating profits in the coming year.

‘A step in the right direction’

Officers said Brierley Homes were creating a business plan which would ensure a steady stream of sites and houses into the future to ensure it was regularly profitable.

Cllr Don Mackenzie, executive member for access, said: 

“This is certainly a more encouraging report than we had a year ago, and even though the outlook for the year is less profit than we hoped for it is, nevertheless, a step in the right direction.”

Councillors heard the £5.9 million of “shareholder value” was equivalent to just short of a 2% increase in the authority’s council tax demand alongside improvements in services.

The meeting was told complaints over road maintenance had dropped since the launch if NY Highways, which was also more responsive to specific issues than previous contractors.

The council’s deputy leader, Cllr Gareth Dadd, said local authorities up and down the country were looking at The Brierley Group “with envy”.

He said: 

“We are at the cutting edge of local government when it comes to matters like this and I think it is something that we should celebrate more.

“So those doom-mongers who are forever criticising the performance of the group, and we have had them, perhaps ought to take that into consideration.

“Shareholder value isn’t just about the financial returns. It’s the performance to the council as client and ultimately to the residents that we serve.

“If we did not operate the Brierley Group we would not benefit from £6m-worth of shareholder value.”

North Yorkshire County Council plans £56 council tax hike

North Yorkshire County Council looks set to approve a 3.99% rise in its council tax demand, despite its leadership acknowledging numerous residents would struggle to afford the increase.

The council’s Conservative-run executive unanimously recommended that the authority sets a £56 rise in its precept for the average Band D property.

A final decision on the council tax bill will be made at a full council meeting in February.

It means average households will have to find £1,467 to pay for the council’s bill, alongside other expected increases by Harrogate Borough Council and police and fire services.

Several members of the executive highlighted the “cost of living challenge” facing residents, and the meeting heard the squeeze on household finances was forecast to tighten.

Cllr Gareth Dadd, the authority’s executive member for finance, said the county council’s precept was “already behind the curve”, having increased by 33% over the past 11 years while inflation had risen by 38%.

He said he accepted that “there will be many that struggle” with the council tax rise, so the proposed rise would be 0.5 per cent less than the maximum the government would allow the authority to levy without holding a referendum.

Cllr Dadd said: 

“We have a moral duty both to our vulnerable and the residents and the services that we provide as well as a moral duty to look after the taxpayers’ purse. I think we’ve got to give at least a nod to that second part of the equation.”

Read more:

He said the proposed rise would enable the authority to be in the best possible shape ahead of the local government reorganisation transition to a unitary council while recognising the drain on the taxpayer.

The meeting heard sharp rises in demand for services such as children’s social care and increases in costs of providing adult social care had left the council’s finance bosses grappling with a decision over whether to “raid the reserves” or increase taxes to limit its deficit.

The executive heard while freezing council tax would be “simply irresponsible”, setting a 2.99% rise would not be in the best interests of residents or the incoming unitary authority.

However, the meeting heard claims from councillors that the authority’s recent past had seen it make a number of politically difficult decisions, putting the interests of residents in the medium term above popularity.

County council faces using up to £11m of reserves to balance books

North Yorkshire County Council could dip into its reserves to balance its books in the next financial year.

Ahead of a budget meeting next week, senior county councillors have warned that the council may have to use up to £11 million of its reserves — despite hiking council tax rate.

The authority currently has £271 million in reserves, much of which is earmarked for capital projects and other costs, such as £31 million to fund the transition to the upcoming new unitary authority North Yorkshire Council.

Cllr Carl Les, leader of the county council, said the authority still faced risks over the ongoing impact of covid and social care.

He said:

“We are facing an unprecedented range of risks – the continuing impact of covid, harsh winters and climate change, the need for interventions to prop up social care, the escalating costs of transport for special educational needs students, to name but a few.

“These pressures are such that given the need to continue to deliver key services at a time of rising demand and the need to successfully transition to a new council, our final budget will require a higher degree of support from reserves than would otherwise be the case or is desirable.”

County councillors will meet next week to decide whether to support proposals for its budget for 2022/23.

Read more:

Among the plans will be an increase in council tax. The county council has the power to hike its rate by as much as 4.5%.

Depending on the level of council tax set, the county council will have to use between £6 million and £11 million of its reserves.

The authority has also warned it will still face a black hole of at least £30 million in three years, even if it levies the maximum permitted council tax rise this year.

Cllr Gareth Dadd, deputy leader and executive member for finance, said: 

“These continue to be turbulent times. We are responding to increased pressures that the pandemic has placed on our communities and the county’s economy.

“At the same time, long-term challenges grow, for example the massive pressures in social care. This means we face further tough choices as we budget for the future.”

Harrogate’s Royal Baths: the council’s under-performing ‘trophy investment’

An investigation by the Stray Ferret has revealed that Harrogate’s Royal Baths have massively under-performed as a commercial investment since they were bought by North Yorkshire County Council in 2018.

The council bought the Grade II listed building for £9 million in 2018 as part of a wider strategy to become more entrepreneurial to plug its declining budget from central government.

But the Baths have only generated about a third of the income expected, raising questions about the wisdom of the decision to buy it, as well as whether the council has the necessary business acumen to invest taxpayers’ money in such schemes.

The council was accused of making a “trophy investment” last month when one councillor said he was “absolutely’ speechless” by the £9 million sum paid for the Baths.

It has now emerged that rental income is way down on what was predicted in a confidential report to councillors before they agreed to buy it.

Prepared to pay £10m

The report, which has now been made public, reveals the council was prepared to pay up to £10 million for the Baths, which included four commercial units.

At the time, they were J D Wetherspoon, The Potting Shed bar, the Viper Rooms nightclub and Royal Baths Chinese Restaurant. The Potting Shed subsequently closed.

The report forecast the Baths would generate annual income of £500,940.

But gross income received in the three years since then was just £613,000 — way down on the £1.5 million expected. The council has also incurred maintenance and other costs of £222,000 on the Baths to the end of March 2021, further reducing the income figure to £391,000.

Read more:

Philip Broadbank

Philip Broadbank

Councillor Philip Broadbank, a Liberal Democrat who represents Harrogate Starbeck on the county council, said

“The price for the Royal Baths investment seems to be high and the rate of return has been very disappointing and needs to improve.

“The Royal Baths complex is in a central position in Harrogate town centre but margins need to improve quickly for council taxpayers to see some financial benefits. It is vital that all the units are let and fully operational and officers need to ensure that happens soon to help the local economy.

“The periods of closure have been significant and challenging and the poor rates of return need to be substantially improved if taxpayers are to have confidence that the investment policies are to work satisfactorily financially.”

‘It will end in tears’

The council has not been helped by lockdowns, which have affected all three surviving businesses. The Royal Baths Chinese Restaurant remains closed but plans to re-open this year.

Stuart Parsons

Stuart Parsons

Nevertheless, Councillor Stuart Parsons, who represents Richmond and is the Independents group leader at the county council, said the financial performance of the Baths was worrying and predicted the council’s attempts to generate income in new ways would “end in tears”. He said:

“There’s always that belief in local government that they have expertise and can deliver anything but they are experts at delivering services rather than property projects.”

He said the council had been “absolutely strapped for cash by central government for 11 years” and was being encouraged by ministers to find new sources of income to “shore up shortfalls”. But he added:

“We have seen a number of councils fail because they have taken on projects like renewable energy and are unable to deliver them.

“They will try their hardest in North Yorkshire but they don’t have the necessary expertise to drive things forward. This will be one of the black marks against the Conservative government. It will end in tears.

“Councils should not be trading. They should be providing services, not building houses or power plants. If they had kept the £9m it could have been used to help people in desperate need in social care.”

Cllr Parsons added it was concerning that major spending decisions involving taxpayers’ money were being made on the basis of such inaccurate forecasts.

“If they are basing their finances on estimates that are unsound then something seriously needs to change.”

North Yorkshire County Council offices in Northallerton.

Councillor Gareth Dadd, deputy leader of the Conservatives on the county council, has been one of the key supporters of the Baths investment.

The Stray Ferret sent him some questions but he did not reply.

‘Better than treasury returns’

A council spokesman said it received legal advice and a surveyor’s report and undertook comparative market analysis to support the business case and necessary due diligence before buying the lease on the Baths from M&G Property Portfolio.

He added the investment “continues to stand up against the alternative investment opportunities where cash returns amounted to an average return of 0.19% p.a. at Quarter 2 21/22”.

Gross income received to the end of 20/21 was £613,000 and standard treasury returns would have generated £152,000, the spokesman added, and therefore the investment “has realised £461,000 of additional benefit to the council and its taxpayer when compared to our standard treasury returns”.

He added covid and lockdowns had had a significant impact since the Baths were bought in 2018.

“Our tenants, in the hospitality sector, have been significantly impacted by the pandemic with extended periods of enforced closure during 2020 and 2021. We are working with them to reach reasonable terms on recovery of arrears where possible.

“National regulations in force until late March 2022 prevent us from evicting tenants that have fallen into arrears as a result of covid.

“All retail and hospitality suffered significant periods of closure and financial challenge throughout the pandemic. The Harrogate Royal Baths is a local asset and we remain confident that Harrogate and the Royal Baths itself will recover from the pandemic and continue to contribute to the Harrogate and North Yorkshire local economy.

Besides the four commercial units, the purchase of the Baths also included two further units held on long-leases by Harrogate Borough Council at a peppercorn rent occupied by the tourist information centre and the Turkish Baths, as well as two car parks similarly let on long leases at nominal rents.

The council set up the Brierley Group of firms, ranging from house builders to lawyers, in 2017 to bring together council-owned companies and find new ways of making money. However, last year it reported a loss of £639,000.

Further losses are forecast for the current financial year.

The council warned last month it faces “enormous financial pressures” and needed to find £19 million in savings.