North Yorkshire Council is set to meet this Friday, to finalise its budget for the upcoming financial year, navigating a challenging landscape of rising service demands and a significant shift in central government funding and issues with funding from Scarborough and Whitby harbours.
The meeting at County Hall will see councillors consider a revenue budget of just over £650 million for 2026/27, a plan that attempts to balance the books while addressing a multi-million-pound deficit.
At the heart of the financial debate is the pressure on essential services, particularly those supporting vulnerable residents. Gary Fielding, the council's Corporate Director for Strategic Resources, highlighted the specific areas where costs are climbing, highlighting £27m of growth in costs for key services:
"£15 million extra has been put into children's services for high-cost placements. 2 million pounds for additional social workers because of case loads, £1.5 million worth of educational psychologist because of case load. 5 million pounds has been put into adult social care to deal with fair pay for care.
And there's also a 1.5 million pounds loss to environment as a result of car parking and property income in the Whitby Harbour and Scarborough harbour and the judgement that results in that having to be ring fenced for harbour purposes.
So all of that adds up."
The reference to the harbours in Whitby and Scarborough reflects a specific legal constraint where income generated within these areas must remain dedicated to harbour purposes, creating a shortfall in the council’s general environmental budget. Beyond these local pressures, the council is grappling with a national funding formula that has seen resources diverted away from rural authorities toward areas with higher deprivation. According to the budget report, the council has seen a like-for-like reduction in government funding of nearly £20 million for the 2026/27 period.
To bridge the gap, the council is proposing a 4.99% increase in council tax—the maximum allowed without a referendum—which includes a 2% precept specifically for adult social care. This would see a typical Band D charge rise by £96.78 to a total of £2,036.32. However, Mr Fielding explained that even this increase struggles to keep pace with the twin pressures of inflation and the £27m service growth:
"27 million pounds in growth alone is a smidge over 5% in council tax by itself and inflation equates to about 7% on council tax.
So you can see given that there is a government grant cut, given that inflation accounts for 7%, given that growth accounts for 5% and given that you're capped at 5% something has to give savings have to be generated and there's likely to be a deficit until such time as that can be worked through."
The council's Medium-Term Financial Strategy indicates a projected deficit of £17 million by the 2026/27 financial year, with a total of £59 million in reserves potentially required to cover shortfalls over the next three years.
Mr Fielding remains pragmatic about the council's ability to navigate these waters, though he cautioned against relying solely on reserves:
"The budget results in a 17 million pounds deficit in 26/27. That deficit over the three years will require 59 million pounds worth of reserves unless further works done to bridge the gap. That is manageable for this council. That is a manageable position. But I don't recommend that we regard that as the destination.
We should look to do more work in the next 12 months plus to try and reduce that so that reserves can be used for one-off investments and preferably to get the terms on that investment to help bridge the revenue gap as well."
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