Millions of pounds in taxpayers’ money is expected to be saved in the first year of North Yorkshire Council as services are brought together to realise the benefits of the biggest overhaul of local democracy in nearly 50 years.
The first in-depth analysis of the finances of the authority since its launch at the start of April has revealed that there will be a predicted underspend of £5 million at the end of its first 12 months.
The latest data, which will be considered by the council’s executive at a meeting on Tuesday, 29 August, means that initial predictions of a £30 million planned deficit in the current financial year will have reduced by a sixth to £25 million.
However, the revelations of the benefits which have been brought about by merging eight councils into one authority are being tempered by the major financial challenges ahead and the ongoing global economic uncertainty.
Executive member for finance, Cllr Gareth Dadd, who is also the authority’s deputy leader, said: “We can already see the benefits of creating one single council for North Yorkshire with the chance to make millions of pounds of savings in the first year alone.
“While this is good news for taxpayers in North Yorkshire, we do still need to be realistic as the situation can change with the major financial challenges and uncertainty that are continuing to affect the global economy.
“We will make a concerted effort, though, to build on the work that has already been undertaken to make sure that every pound of taxpayers’ money is spent wisely and used as effectively as possible to deliver key services across the county.”
The multi-million pound underspend has been mainly secured through lower energy costs, which have been achieved due to falling bills and a positive decision to change the council’s electricity provider.
Major savings have also been achieved by redeploying staff to fill vacancies after North Yorkshire County Council and the previous seven district and borough authorities merged in the biggest shake-up of local government since 1974 to pave the way for a devolution deal.
However, there are significant financial pressures in two of the council’s largest directorates, health and adult services and children and young people’s services.
Both directorates have seen a growing demand for their services, and the provision of care and support for adults, for instance, is predicted to see increased spending of £20.7 million since the end of the last financial year.
The support needed for young adults with multiple disabilities and older people with complex needs linked to dementia has also placed intense pressure on the council’s finances.
There is also a predicted significant shortfall on income within the council’s planning services, with a reduction in the number of applications across the county resulting in a forecast fall in funding of £1.3 million for the current financial year.
Housing services are also witnessing major pressure of finances with a predicted £628,000 overspend in the current financial year. The main cause is the cost of accommodation for homeless people, which is responsible for an estimated £424,000 overspend. Work is being undertaken by the council to reduce future costs.
The multi-million pound deficit in the council’s budget is being covered for the first year through the one-off use of reserves, after some additional savings have also been made. In the longer term, the financial gap is expected to widen and will need to be met by additional savings.
A masterplan is now being pulled together to maximise millions of pounds in savings across North Yorkshire Council to help counter the unprecedented financial challenges. The plan to introduce the savings needs to be set out by February next year to ensure that the new authority does not have to continue to rely on cash reserves to balance its books.
During the second year of the new council’s operation, it is estimated that there will be a further shortfall of £30 million, with another annual deficit of £45 million predicted in the third year. Unless savings can be found, a total of £105 million will be needed to be used from the council’s reserves over the next three years.
The shortfall in our budget has been caused by a series of factors, such as the high rate of inflation, issues surrounding supply chains and rising staffing costs as well as the aftershock of the Covid-19 pandemic.
However, the opportunity to streamline the way in which key services ranging from waste and recycling to education, highways and planning are delivered to nearly 33,000 businesses and the 615,000 residents in North Yorkshire is seen as essential to helping to tackle the growing demands on the new council’s finances.
By joining up services and maximising spending power, we are set to recoup between £30 million and £70 million, which will become annual savings. The scale of the new council’s operations will see it have an overall spend of about £1.4 billion, including £343 million on schools.