North Yorkshire Council Reports Year-End Underspend Amid Significant Financial Pressures

North Yorkshire Council has reported a headline underspend of £2.59 million for the 2024/25 financial year but with significant overspends in some areas.

The £2.59 million figure represents less than 0.5% of the councils overall projected spend. Councillor Gareth Dadd, Executive Member for Finance, noted that this headline figure masks significant underlying pressures.

"the headline figure shows, and I use the term loosely, but an underspend of two and a half million pounds.

That is less than 0.5% of our projected spend, so I think it's fair to say we are there or thereabouts in our projections, but what it does mask is a couple of matters.

There's nearly 16 million pounds in over spend, by services to our most vulnerable that was, I suppose in the present climate expected for the want of a better word. 

And it's also masks that we've got early savings that have offset the large majority of those overspends."

The council's latest revenue budget monitoring report details this overall projected underspend of £2,591k for the 2024/25 financial year. This position is reached despite significant overspends in people-related services, which have been offset by forecast underspends in other directorates. A substantial portion of the projected underspends relates to the early achievement of budget savings planned for 2025/26, including an additional £5 million saving on utilities. These are considered "one-off windfalls" from delivering savings ahead of schedule and highlight the need to address overspends in adult and children's services.

Looking ahead, the financial projections are described as "not rosy by any stretch of the imagination". The council has already declared a recurring deficit, or "black hole," of about £34 million to £35 million per year, as set out in the Medium-Term Financial Strategy (MTFS) approved in February 2025. This position is anticipated to worsen due to expected changes in government funding distribution.

Significant Overspends

The report highlights key areas facing significant financial pressures. Health and Adult Services (HAS) shows an overspend against budget of £7.4 million. This is attributed to increasing activity, rising care market costs due to acuity of care, and high levels of hospital/NHS-related costs passed on to the council. Despite a cost recovery programme and the use of one-off grants and funding, the directorate's financial position remains precarious. Specifically, Care and Support within HAS is showing pressures totalling £15.7 million. This includes a net overspend of £11.1 million on residential and nursing care, driven by higher gross costs for long-term care packages. Direct Payments show a net overspend of £1.2 million, partly due to an expected increase in this type of care, while non-residential support has a net overspend of £5.7 million, primarily from increased Supported Living costs. Vehicle provision, largely through taxis, also shows a £1.5 million overspend. Increased hospital discharge activity, averaging 17.2 per day in Q4, exceeding central government grant funding, adds to cost pressures.

Children and Young People’s Services (CYPS) reports a net overspend position of £8.3 million. The Pooled Budget for CYPS is £4.1 million overspent due to increasing demand and high-cost placements for children with multiple vulnerabilities, reflecting national market conditions where demand outstrips supply. Child Placement costs are £796k over budget due to a higher than anticipated number of Looked After Children, partially offset by Home Office contributions for unaccompanied asylum-seeking children. The Inclusion service has a £1.4 million overspend, driven by costs for agency workers for statutory educational psychology assessments (£895k) and increased need for equipment due to Occupational Therapy assessments (c.£470k). Disabled Children’s Service (DCS) is £1.4 million over budget, influenced by staffing demands in Children's Resource Centres (£800k), lower Health contributions (£220k), and increased Direct Payments costs (£1m), although this was partly mitigated by lower spend in Short Breaks. Home to School Transport has a net overspend of £650k, mainly due to the cost of the transport network and increased SEN transport costs linked to the rise in children requiring Education Health and Care Plans (EHCPs). The High Needs Block within the Dedicated Schools Grant (DSG) has an overspend of £3 million for 2024/25, leading to an accumulated deficit of £16 million at 31 March 2025, as insufficient funding from the Department for Education continues to pressure the local authority and schools.

Other overspends noted include Regulation Services (£454k), with pressures in Pest Control and staffing costs from changes to employment terms and conditions. Bereavement Services show a £537k overspend due to lower cremation income (linked to reduced death rates and building works at Skipton Crematorium) and overspends in staffing, equipment, and maintenance. Registration Services (£170k overspend) and Coroners Services (£213k overspend) also experienced pressures, largely related to staffing costs and increased expenses for post-mortems and forensic testing.

Significant Underspends

Conversely, several areas reported significant underspends, helping to offset the pressures in vulnerable services. 

The Environment Directorate shows a net underspend of £6.7 million. Highways & Transportation contributed significantly to this with a £6.1 million underspend. 

Key factors included a £4.2 million underspend on Street Lighting Energy due to lower contractual prices, a £3 million rebate from NY Highways due to efficiency improvements, and an £806k underspend on Adverse Weather due to a milder winter. 

Staffing vacancies also contributed a £236k underspend. However, these savings were partially offset by a £2.5 million overspend on Highway Maintenance due to network deterioration. 

Waste Services reported a £2.5 million underspend, driven by additional income and performance payments from Allerton Waste Recovery Park (£1.4m), overachieved income from Green Waste Subscriptions (£346k), and contract prices increasing less than inflation (£450k), although staffing costs showed a £317k overspend.

The Community Development Directorate reported a net underspend of £1.1 million. Sport and Active Wellbeing services achieved a significant underspend of (£1,036k) within the Culture, Arts, Libraries, Museums, Archives, Key Venues and Leisure category (£341k total underspend for the category), primarily due to a VAT reclaim, external operator energy provision savings, and overachieved income. Economic Development, Regeneration, Tourism and Skills had an £803k underspend, mainly from staffing savings and savings on consultant/professional fees.

Within Resources, Central Services and Corporate Miscellaneous, a net underspend of £10.4 million is reported. Property shows a £2.6 million underspend, heavily influenced by £8.2 million in utilities savings, with £5 million of this already factored into next year's budget savings. Other underspends in this area include Financial Services (£1 million underspend from contract efficiencies and vacancies) and Legal and Democratic Services (£899k underspend from staffing and housekeeping savings). Corporate Budgets show a £3.3 million underspend, aided by one-off central government funds and underspends on general provisions. Dividends and Interest Earned were £3.3 million higher than budgeted due to greater investment returns.

The North Yorkshire Education Services (NYES) traded service exceeded its net profit target by £1.27 million, driven by higher gross profits in areas like Cleaning, Catering, Payroll, Training & Learning, and Financial Management Services, attributed to staff vacancies and new contracts.

Harbours and Whitby Cliff Lift

The report details a significant overspend of £788k within Harbour Services, which is reported as part of the Environment Directorate for the 2024/25 year-end. 

This overspend includes additional costs associated with the Whitby Harbour court case (£183k). The remainder predominantly relates to reduced income from mooring fees (£66k), harbour fees (£118k), parking fees (£105k), and rental income (£141k). 

Following the court judgement (North Yorkshire Council v Boyce & Anor EWHC 611 (KB) (14 March 2025)), future quarterly financial monitoring for harbours will be reported separately in a ringfenced account. The council says that this ringfenced account will incorporate expenditure and income previously reported outside the harbours service, particularly car parking. 

The Council says that work is ongoing to identify the exact budgets and establish a reserve for balances that should have been ringfenced. Funding for approved works to the Whitby Fish Quay, previously planned from the Directorate's forecast underspend, will now be funded through the ringfenced harbour reserve in 2025/26 following the judgement.

Within Integrated Passenger Transport, which reported a £1.1 million underspend mainly due to lower passenger numbers impacting concessionary ticket costs, there is a specific £52k pressure related to the provision of the temporary bus service to replace the out of action Whitby Cliff Lift.

The council proposes transferring the net revenue underspend of £2,590k to the Capital Supply Chain Reserve, given pressures reported within the capital programme.