North Yorkshire County Council has warned it is facing a black hole of at least £30m in three years even if it levies the maximum permitted council tax rise this year.
The authority is considering asking for a below inflation rate increase of between 2.99 per cent and 4.49 per cent on its £1,411 charge in 2021/22.
The potential increase is before potential others which will be added to residents’ final council tax bill by the county’s police, fire and rescue service and district, borough and parish councils and comes at a time residents are also facing soaring energy bills.
More than half of the potential county council’s increase would be used to offset spiraling social care costs for the authority, which has seen a 40 per cent reduction in spending power over the last decade.
A report to the executive states the council has been able to demonstrate that the £13.6m extra costs caused by inflation and rising demand for the social care budget alone are well in excess of the funds raised by the amount the council is being allowed to levy extra for social care.
While the council believes the government’s formula for distributing council funding is unfair in the way it assesses the cost of delivering services in rural areas, the authority says it also fails to takes into account that counties, including North Yorkshire, tend to have higher levels of council tax.
It states the Government has indicated work would start “in the coming months” to consider how to update funding distribution, which could mean potentially significant changes as early as 2023-24.
Councillor Gareth Dadd, the authority’s executive member for finance, emphasised the projected £30m deficit in 2025 was based on council tax rises being limited to 1.99 per cent.
He added the council’s position was “not all doom and gloom” as the projected deficit also did not account for potential efficiencies being executed to add to the £200m the authority had introduced over the last decade, potential extra funding for social care or savings from local government reorganisation.
Cllr Dadd said despite the projected deficit the council would not be looking to lobby the government for greater flexibility on its council tax precept as residents’ finances were a major consideration.
He said: “We are here to represent the interests of residents, so we have got to balance the needs of the authority to provide services, especially to vulnerable people, with the ability and willingness of the communities to fund it.
“Over the last 11 years council tax has risen by 33 per cent and yet inflation, by the retail price index, has run at 38 per cent.”