North Yorkshire Finance Boss Calls on Government for Radical Reform of Council Funding

The Government has been urged to embark on major reforms for the funding of local authorities to ease intense financial pressures as North Yorkshire Council’s deputy leader delivered a key speech to hundreds of leading figures.

Cllr Gareth Dadd also made a plea for clarity on the future of funding for councils when he spoke at the Local Government Association’s annual conference, which is being staged at the Harrogate Convention Centre.

The showpiece event will run until Thursday this week and is being attended by hundreds of senior representatives from local and central government as well as other public sector bodies, charities and business.

In an opening speech to the conference, Cllr Dadd, who is the council's Executive Member for Finance, highlighted the opportunities that the launch of North Yorkshire Council in April last year has presented to stave off some of the huge financial pressures which all local authorities are facing nationally.

He also told delegates that York and North Yorkshire secured a devolution deal in August 2022, meaning more decision-making powers on a local level and millions of pounds of additional funding from the Government.

But Cllr Dadd warned that the way in which funding is delivered to councils by the Government needs to be overhauled to ensure that local authorities can remain financially viable.

In his speech, Cllr Dadd, who is also the council’s executive member for resources, said:

“North Yorkshire Council was born on April 1, 2023, when eight councils became one. We are the first council ever to successfully pursue unitary status and devolution at the same time.

“As the deputy leader and executive member for resources, I can tell you straight that these have delivered us huge financial wins at a critical time for local government.

“I believe that North Yorkshire Council is well-run - particularly when it comes to money, but despite a sound track record, we too have our financial challenges with our annual deficit estimated at in excess of £48 million by March 2027.

“Something has to give and reform, alongside changes to funding, are essential.”

Cllr Dadd’s speech has come at a key time as Chancellor Rachel Reeves is about to unveil her spending plans in her first Budget since Labour came to power in July.

The Chancellor is reportedly looking to make tax rises and spending cuts to the value of £40 billion when she announces the Budget on Wednesday next week.

During his speech in Harrogate, Cllr Dadd spoke about the specific pressures that councils are facing, such as the “unrelenting demand” for care for older people, working age adults, and children and young people.

He stressed that there is not enough capacity to cope with the demand for care, and costs have soared at the expense of the taxpayer. Cllr Dadd said that individual packages of care for more than £1 million a year are now becoming a “more regular feature” in North Yorkshire.

Due to the escalating demand and the cost of providing council services, it is predicted that North Yorkshire Council will have an annual deficit of about £48 million by the 2026/27 financial year.

And by March 2028, the estimated accumulated deficit for providing special education needs and disabilities services alone will be in excess of £90 million.

But Cllr Dadd pointed towards the “enviable opportunities” that local government reorganisation has presented in North Yorkshire.

Between £30 million and £69 million in savings were outlined in the business case for launching North Yorkshire Council, which was formed when the previous county council and seven district and borough authorities merged last year.

The council has a plan to achieve more than £40 million in savings – although this has still left the predicted £48 million annual deficit by March 2027.

Cllr Dadd said:

“These savings result from lots of structural changes, but we know that reorganisation can be a catalyst to doing things differently and more creatively as we now have all the council levers in one place. So, I expect that we will be able to push the upper boundaries of that savings estimate.

“Without this I struggle to see how we would be able to wrestle with the pressures we face and most of you do not have the opportunities of local government reorganisation that we have been afforded.

“I sincerely hope that SEND and core council finances, in particular, will feature in the Chancellor’s budget next week. We all need a sustainable long-term funding plan without delay.”