North Yorkshire leader calls for powers over council tax rates to tackle funding crisis

Councils are in a perilous financial state and struggling to deliver statutory services such as housing and adult social care.

A recent report from the County Councils Network, which represents 37 local authorities including North Yorkshire and the East Riding, found its members face a funding shortfall of £54 billion over the next five years.

Coun Les, previously the financial spokesperson for CCN, said that financial devolution would give local authorities greater stability and spending power.

He said: “In North Yorkshire, we are facing a financial crisis and a significant underfunding situation.”

The local government reorganisation due to the devolution deal has meant the council has saved £40 million, but Coun Les said there is still a £48 million black hole.

In particular, the increasing costs of adult social care and transport for children with special educational needs is having an impact.

The Tory council leader explained that getting one SEN child to school can cost up to £1.2 million per year.

“A large part of it is the SEN transport that is needed for some of the vulnerable kids in our society and it’s the right thing to do to actually provide for them, but we can’t deny there’s a budget implication for that,” he said.

Coun Les believes letting North Yorkshire Council set its own council tax rates and retain that money, as well as business rates and potentially some income tax, would be hugely helpful.

Currently the annual increase is capped at five per cent, unless the government grants an exemption in special circumstances, like Birmingham City Council’s bankruptcy, following a referendum.

However local government figures have long called for greater controls.

Coun Les said: “People probably think that we raise council tax and keep it all, but a large part of council tax goes down to London then comes back in a grant.

“Fiscal devolution would be very helpful, and then having the certainty of a fixed sum of money for a certain period of time is also useful, as that would allow us to plan.

“It really is an anomaly that someone can pay less in council tax for your mansion in London, than for a house in North Yorkshire.

“That’s just not right - there needs to be change.”

Coun Pete Marland, chair of the Local Government Association’s economy and resources board, explained that councils face a funding shortfall of more than £6 billion over the next two years “just to keep services as they are”.

He argued elected councillors should have the power to set council tax rates locally, instead of central government, saying: “No other tax increase is subject to the extra cost of a referendum, as all other taxes are rightly seen to be within the mandate of the elected government.

“The same should apply for council tax. The ballot box on local election day allows for people to pass judgement on their councils.”

Angela Rayner, the Deputy Prime Minister and Local Government Secretary, recently said that Labour had no plans to increase council tax beyond the current system.

However, the government has pledged to give councils multi-year funding settlements to provide greater stability.

In one of her first interviews in power, Rachel Reeves told the Yorkshire Post: “One of the big challenges that local authority leaders and councillors say to me is that they don’t know from one year to the next what their budget is going to be, so it’s very difficult to plan the future and get value for money.”

A government spokesperson said: “We will help support people to live an independent, dignified life and give every child the best life chances possible.

“Despite the inheritance left, we will work with local government to fix the foundations and get them back on their feet by doing the basics right, including providing more stability through multi-year funding settlements, ending competitive bidding for pots of money, and reforming the local audit system.

“We will set out more detail at the next Spending Review and Local Government Finance Settlement but stand ready to speak to any council that is experiencing financial difficulties.”