North Yorkshire Council chiefs say tough decisions lie ahead after criticising the government for a £20m cut in funding.
Members of the authority’s executive will meet next week to discuss the budget for 2026/27 after the council received a new funding settlement from the Ministry of Housing, Communities and Local Government.
The authority has seen an increase in its core spending power of £101m over the next three years.
But council chiefs say this rise is driven entirely by the assumption that it will increase council tax by 4.99 per cent in each year and does not take into account inflation.
Councillor Carl Les, leader of the authority, said the authority had lost nearly £20m in base funding compared to last year — with the loss “significantly higher” when inflation was factored in.
“We have petitioned the Government to ensure that we get the fairest possible funding settlement, but we have still been left with a multi-million-pound shortfall.
“All councils are facing a tough financial situation, but delivering services across deeply rural areas such as North Yorkshire costs more.
“There will undoubtedly be tough decisions ahead when we come to consider our budget for the next financial year and into the future.”
The new funding settlement comes after the council says it faced a £22m shortfall during the current year because of the loss of the rural services delivery grant and increases in National Insurance contributions.
Deputy leader, Councillor Gareth Dadd, whose responsibilities include the authority’s finances, said: “The headline core spending power figure gives an artificially positive picture of our overall funding.
“Despite additional national funding for social care, we are facing a net reduction in core government support.
“While the Government has said funding is being used to support the most deprived parts of the country, this should not be at the expense of rural areas.
“Many of our services are led by demand – if people are eligible for a service, then we will provide them with the support they need.”
Senior councillors say that despite the funding challenges, “financial prudence” has meant the authority has reserves available to draw on to help counter the budget shortfall.
Nationally, several councils nationally are understood to be seeking “exceptional financial support” from the Government due to perilous finances.
A number of the authorities are requesting permission to raise council tax at levels above 4.99 per cent without the need for a referendum with their voters.
Cllr Dadd added: “We are fortunate that we can make services as efficient and cost-effective as possible for our taxpayers through the launch of North Yorkshire Council, when eight former authorities merged into one in 2023.
“However, the truth is that we are faced with some very difficult options to ensure that we can provide services as effectively and as efficiently as we can to the public.”
Members of the council’s executive will meet on Tuesday next week to discuss the proposed budget, which totals just over £650m for the forthcoming financial year from April 1.
In response to the criticism, a Ministry of Housing, Communities and Local Government spokesperson said: “We’re making almost £78bn available for council finances next year, including nearly £756m for North Yorkshire.
“This will help them deliver the high-quality public services people need.”
Ministers said that over the three-year settlement, North Yorkshire would see a 14 per cent increase in core spending power from 2025/26 to 2028/29, equivalent to £101m.
The government said they were taking into account pressures faced by rural authorities, with measures including a journey times adjustment, a remoteness adjustment in adult social care formulas and updated data to ensure that deprivation in rural areas was captured more accurately.
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