North Yorkshire Council expected to hike council tax by 4.99% for next three years - blaming government for shortfall
Council tax in North Yorkshire is expected to go up by 4.99 per cent - the maximum increase without a referendum - every year until 2029, with senior figures saying “there is no alternative”.
The local authority has published its Budget proposal for the next financial year, which is set to be voted on by councillors on 13 February.
This outlines how Labour’s changes to the local government funding formula - to focus solely on deprivation instead of the extra expenses of rurality - will cut £33m off North Yorkshire Council’s annual budget.
The Government also ended the £14m rural services delivery grant, and the council says that the increase in employer’s National Insurance Contributions will hike costs by £9m.
On top of this, demand for children’s services, particularly special educational needs and disabilities (Send) support, is increasing, leaving an overall annual black hole of around £70m.
The new local government funding formula is set for three financial years, and North Yorkshire Council expects to increase council tax by 4.99 per cent each of those.
“We used to have long debates about where we should fix council tax,” North Yorkshire leader Coun Carl Les said.
“We used to have that tension within groups and within the council.
“I think next Friday [at full council], we're going to find there's enormous consensus across the chamber to say you've got to put it up by 4.99 per cent. There's no alternative.”
It comes after a report from the Institute for Fiscal Studies found that the Government’s “real-terms” increase in local authority funding is based on hikes in council tax.
“New analysis shows that this depends to a large extent on an assumption of substantial real-terms increases in council tax bills: 3 per cent a year above inflation, on average, over the next three years,” the respected think tank.
“Without these real-terms tax increases, overall council funding would grow at less than half the rate (3.8 per cent as opposed to 8.8 per cent in real terms) across England as a whole – and would actually fall in the less deprived parts of the country that stand to lose out from funding reforms.”
Coun Les told The Yorkshire Post that this had been “crystal clear” from Whitehall.
“The message that we've been picking up in briefings that we've had at the County Councils Network from senior civil servants is that the government is completely predicated on the fact that we will, if we want to maintain our core spending power as they call it, have to put council tax up by 2.99 per cent plus the 2 per cent Adult Social Care Levy.
“That message has been crystal clear, and if you don't do it, then you don't need it.”
Corporate director of resources Gary Fielding explained that hiking council tax was “only a small part of the pressures we've got”, which he described as “unrelenting”.
“The budget that goes forward next week has savings still to be delivered at £56m,” he explained.
“By the end of this period, we'll have delivered about £130m worth of savings, and £68m of that is directly as a result of local reorganisation.”
In 2023, six district councils and a county council were replaced by a single unitary authority of North Yorkshire.
“Had it not been for local reorganisation,” Mr Fielding said, “this council would have been in financial difficulty, like many of the councils from up and down the country.”
Meanwhile a council tax rise of 4.99 per cent, the maximum amount without a public vote, was set by East Riding councillors meeting in Beverley.
The increase will see a Band D property pay an extra £93.37. East Riding Council says it faces increased demand for council services, particularly children’s and adults’ social care but will be losing a total of £62m over the next three years as a result of the Fair Funding Review.
The council says it is making a significant programme of savings and organisational redesign, expected to save £41.8m by 2030.
Tory council leader Coun Anne Handley said without increasing tax, she couldn't deliver on priorities.
However, group leader of the Liberal Democrats Coun Denis Healy said taxpayers were facing a double whammy of reduced central government funding and a local financial strategy that relies on high-risk, unproven "transformation" schemes.
He said: “The administration is gambling on delivering massive structural changes at an unrealistic pace, with almost no financial cushion left if things go wrong.”