North Yorkshire Faces Significant Funding Cuts Amid Government Review, Leaders Warn

North Yorkshire Council is anticipating a significant reduction in government funding, with a senior councillor warning that an upcoming overhaul of local government finance is “not good news” for the region.

Carl Les, leader of North Yorkshire Council, has indicated that the government’s “fair funding review” is likely to result in a substantial loss of funding for the authority.

Mr. Les described the formula behind local government funding as "notoriously complex". He informed fellow councillors that while the government has outlined its approach, it has not yet clarified how these changes will affect individual councils. The council’s financial experts are currently working with others across the sector to fully understand the implications. "The initial view that I’ve been given as colleagues work through all of this is that it is not good news," Mr. Les stated.

Kevin Hollinrake, the Conservative Member of Parliament for Filey, highlighted that North Yorkshire has already experienced a loss of £14 million when the government "summarily took" the rural services delivery grant. He added that the council's analysis suggests the fair funding review will leave North Yorkshire approximately £27 million a year worse off.

"We've already lost 14 million pounds. The government summarily took it off as in terms of the Rural Services delivery grant.

Now the councils worked out the impact of the fair of funding review, and it looks like  it'll be 27 million pounds a year worse off, which is particularly galling when areas like Middlesbrough, which are typical Labour areas of course, are 42 million pounds better off.

It's basically taking money off rural areas and putting into urban areas like. Middlesbrough, Derby, Nottingham, places like that.

This isn't a fairer funding review. This is a ruthless way to shift monies from rural areas into urban areas, yet another example of that war on rural England."

Mr. Les concurred, stating that the prior loss of the rural support grant was "quite sudden" and this "further whammy on top" makes managing council finances "very difficult". 

"When we lost that rural support grant, that was quite sudden.We didn't expect that.

So we're having to adjust for that and then to have this further whammy on top.

It really is making it very difficult to manage the council finances, but also it is just not fair. It is flawed in its thinking.

We have elements of deprivation as well, but the biggest thing for North York is that we're actually a low wage economy.

And we can't stand the impact of this as well as other areas can, where it is a high wage economy. "

A particularly challenging element of the government’s proposal is the introduction of 100% council tax equalisation. This means the government would offset the full amount of a council's council tax base when determining its funding allocations. Mr. Les explained that this measure is designed to transfer funding from local authorities with a relatively high council tax base, such as North Yorkshire, to those with a lower base. He raised concerns about the autonomy of local authorities and the potential disincentive for councils to grow their tax base. Notably, only one in four councils supported this approach in a previous consultation on funding reforms.

Both politicians underscored the tangible impact on local services. Mr. Hollinrake emphasised that the financial changes are not merely abstract concepts of council finances, but directly affect services provided to residents, including social care, support for children with special needs, and road maintenance. He specifically highlighted that £4 million a year in the formula relates to potholes, arguing that urban areas likely have less of an issue with such road damage. Mr. Les agreed, explaining that North Yorkshire's extensive road network and varied topography contribute to its pothole challenges, making criteria that only fund roads with dense populations "flawed".

"Our potholes come because of the length of road that we have and the topography that we have in the, in, in the county.

And to actually put a a criterion in that you should only fund roads that have got a lot of dense population around them, so a lot of traffic on them, It's just flawed.

We need our roads as much as anybody else needs their roads, and our roads come with particular challenges"

Despite these concerns, Mr. Les did note some "positive elements" in the government's approach, including a better recognition of the extra costs faced by rural authorities for services like adult social care and home-to-school transport. However, he reiterated that "For North Yorkshire overall, the initial calculations point to a significant loss of funding compared to previous years".

North Yorkshire Council is preparing its comprehensive response to the eight-week consultation on the review, which concludes on August 15. Mr. Les confirmed that council chiefs have already taken the opportunity to directly appeal to parliamentarians in Westminster for support given what appears to be a "very challenging outcome".

Mr. Hollinrake suggested that residents could contact their local MPs, including Allison Hume who represents Scarborough, to voice their concerns about the perceived unfairness. Both expressed hope that the government would reconsider its proposals, with Mr. Hollinrake stating that the fight "will continue".