North Yorkshire Council is changing the way it provides social care for adults as it faces a £43m black hole in its annual finances by 2020.

The council intends to give people "personalised budgets" so they can buy their own care according to their needs.

North Yorkshire and York Primary Care Trust is also to study the region's population statistics when committing money for treatments. Dementia, cancer, heart disease and strokes are all common among elderly people.

The new approaches, being used as blueprints by councils and trusts across the country, are aimed at meeting the growing demands of an ageing population over the next two decades.

The problem is particularly acute in North Yorkshire. Projected population figures suggest there will be 155,300 over-65s in the county in 2020, up 50 per cent on 2001.

North Yorkshire Council's corporate director for adult and community services, Derek Law, said caring for an ageing population was one of the biggest challenges facing local government.

He said: "Doing what we are doing now is not an option. We have got to do things more cost-effectively but, as the population is getting older, people's expectations are getting higher."

The council plans to work with district and parish councils, health bodies, voluntary organisations and the independent sector to develop care services.

Front-line care staff could work from home or in community hospitals, libraries, leisure centres and customer service centres.

Mr Law said residential care would become "a thing of the past" within 20 years as the council provided more extra care housing schemes, designed to allow vulnerable people to live independently.

Director of public health Peter Brambleby said the trust had studied migration figures, school rolls and election rolls so it could better plan where money for treatments will be needed.

He added that the new system would mean patients get more value for money from a care trust that began 2007 with a £45m debt.

The trust was formed in October 2006 to replace four PCTs - Hambleton and Richmondshire; Craven, Harrogate and Rural District; Selby and York; and Scarborough, Whitby and Ryedale.

Mr Brambleby said: "What we inherited when we came together from four PCTs to one was a debt that needed to be paid off; we are right on track to pay that off by April 2009.

"Frankly, that's been a good discipline. It has meant we've had to look in every way at where every pound goes.

"Eventually we could be better placed than, or as well placed as, elsewhere from having to do that.

"The pressures will always be on us. The real challenge of commissioning is getting a better fit between the resources we have and the needs of the population."