North Yorkshire councils set aside £38m to cover cost of local government reorganisation

A £38 million funding pot, with contributions from all North Yorkshire’s main eight councils, should be created to cover the cost of local government reorganisation, it has been claimed.

North Yorkshire is set for a huge local government shake-up

A meeting of North Yorkshire County Council’s executive heard the total cost of forming a unitary authority remained uncertain, but it had been forecast by setting aside £38 million, the investment would achieve the same level of savings.

News of the potential total cost to council taxpayers has drawn astonishment from some district councillors. The total cost of services that Richmondshire District Council provides in 2021/22 will be £21.6 million.

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Catterick and Brompton-on-Swale councillor Lesley Rowe said: “The cost savings in my opinion are an illusion. The councillors of the new authority will spend a huge amount on travel, getting to know areas and still won’t be able to do an effective job, especially in areas like planning, which need a strong local knowledge.”

Should the funding pot level be agreed by all councils, it would be equivalent to 20,312 annual Hambleton district band D council tax bills, but the county council’s executive member for finance Councillor Gareth Dadd said in the long-term the costs of reorganisation would be clawed back.

He told the meeting while the reorganisation aimed to see service improvements and cut confusion for residents, the overriding principle was about unlocking potential financial gains.

The meeting heard a study by PriceWaterhouseCoopers to identify the potential costs and savings had identified ongoing savings from a single unitary authority of between £31.9 million to £68.5 million a year.

Coun Dadd said a return of six per cent from alternative investments would be considered satisfactory, but a sum of £38 million invested into loal government reorganisation was likely to achieve a return of about 100 per cent.

He said: “It would be very easy for people to say you’ve got a unitary authority and it’s going to end up costing us £38 million to achieve it. But the other side of the coin is that will realise, or should realise savings of anything from £30 million to up to £70 million.

“I can’t repeat that enough because the headline figure is quite startling. I’m not saying for one minute that we will need £38 million. I’m saying the money is there should it be needed. ”

He said drawing on the fund would be subject to a system of scrutiny and the funding would not represent “an open-ended cheque”.

He added: “My ambition is to give that new authority the best possible start in life. I make a plea to future members of the new unitary that they hold that new unitary’s feet to the fire to deliver those savings that are possible.

"For the first time in four or five generations we will have some slack, some equity to start having proper debates about what we do with council taxpayers’ money. Over the last ten or 15 years I would suggest we have had limited ability to do that. Hopefully the sunny uplands will look that bit sunnier should we get this flying.”

The meeting was told given the financial volatility the local authority was facing, due to Covid, market conditions, supplier issues and demand for services, the council would need to review the funding in the coming months and the funding pot total could go down to pay for other issues, such as social care.

The meeting heard the county council would ringfence £34.1m of its reserves, much of which was set aside to cover the cost of the pandemic, for the funding pot.

After the meeting Richmondshire District Council’s leader, Councillor Angie Dale described the reorganisation as “a mammoth task” and the potential cost as “absolutely crazy”.

She said: “When you think of the budget that Richmondshire District Council runs on it is a massive amount. When we looked at the east-west model we said there would be savings, but were savings that you wouldn’t actually see as they would have to be reinvested.

“Hopefully they will get it right. The impact of this will still be going on four or six years down the line, the same as Durham.

“It’s not a quick fix, but we need to work together to get the best results for our areas, council staff and residents. There’s been enough negativity, we just need to move forward.”