Residents and businesses across North Yorkshire have been warned that difficult decisions lie ahead as the county council prepares its budget for the next financial year amid a significant funding shortfall.
North Yorkshire Council says it is facing a loss of around £40 million in funding, following changes to the way local government is financed by the Government.
This includes a reduction of almost £20 million in core funding compared with last year, coming just 12 months after the authority received one of the lowest financial settlements in the country.
The council has already been managing a gap of more than £20 million in the current financial year.
Under the new arrangements, the Government’s funding settlement will span three years and assumes councils will rely more heavily on council tax income.
Ministers have said they expect council tax to increase by up to 4.99 per cent in each of the next three years to help address funding pressures.
Members of the council’s executive are due to meet on Tuesday, 20th January to discuss the proposed budget for the next financial year, which totals just over £650 million and would take effect from 1st April.
North Yorkshire Council leader, Councillor Carl Les, said the authority had raised concerns with the Government but was still facing a significant shortfall.
“We have petitioned the Government to ensure that we get the fairest possible funding settlement, but we have still been left with a multi-million pound shortfall,” he said.
“All councils are facing a tough financial situation, but delivering services across deeply rural areas such as North Yorkshire costs more.”
North Yorkshire Council’s deputy leader and executive member for finance, Councillor Gareth Dadd, said the headline funding figures masked ongoing pressures.
“Despite additional national funding for social care, we are facing a net reduction in core government support,” he said.
“While funding is being targeted at deprived areas, this should not be at the expense of rural communities.”
He added that while efficiencies had been achieved since the creation of North Yorkshire Council in 2023, difficult choices remained unavoidable.
The council has also highlighted rising costs linked to social care demand, home-to-school transport and delivering services across a large, sparsely populated county.
It currently spends more than £50 million a year on home-to-school transport, with costs significantly higher than the national average due to travel distances.
The proposed budget for 2026/27 includes a 4.99 per cent increase in council tax, including a two per cent adult social care precept. For a Band D household, this would mean an increase of £96.78 per year, bringing the total annual bill to £2,036.32.
Since the launch of the unitary authority in April 2023, plans have been put in place to deliver more than £130 million in savings.
Despite this, the council forecasts an annual funding gap of around £25 million by March 2029.
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