North Yorkshire’s new unitary authority is facing a possible financial black hole of close to £50m a year.
That's according to North Yorkshire County Council’s Executive Member for Finance, Councillor Gareth Dadd.
He says the county council expected to cover a deficit of up to £20m but other factors are also in play.
Although he did not estimate the total structural deficits that the seven second tier authorities would have accumulated by the time the new council is launched in April, he said it was believed it would be “substantial”.
However, it has been estimated the combined ongoing deficits of the district and borough councils could be in the region of £10m.
In addition, ahead of the recent increasing inflation rate the county authority had been prepared to cover a deficit of up to £20m.
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 £50m.
An officer’s report to a meeting of the council's executive stated:
“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.”
The meeting also heard that the cost of local government reorganisation in North Yorkshire could be as high as £38m.
The fund to cover the costs of moving to a single unitary authority next April has been topped up
But North Yorkshire County Council’s executive member for finance, Councillor Gareth Dadd doesn't think all the cash will be used.
Coun 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 £252m saving over a five-year period after £38m in costs were taken off.
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