North Yorkshire County Council has raised a “red flag” over its finances for the coming year, despite announced a £2.8 million underspend for the first three months.
The authority has issued the warning despite having made annual savings of more than £200m since 2011/12 in response to austerity.
The authority’s executive member for finance Councillor Gareth Dadd said while budgets were always a best guess, the pandemic had shattered the authority’s traditional projections and its ability to budget with confidence.
He said: “I will say that the Government have honoured their pledge, by and large, to offset the majority of the additional Covid costs, but one has got to question for how long or if that can continue.”
Coun Dadd added the council had drawn upon £3 million of reserves to balance the books for the current financial year, which was an unsustainable move.
However, he said: “We are in a far better position than most other authorities up and down the country.”
Major issues threatening the council’s finances include hospital discharge costs and home to school transport, over which there is a projected £785,000 overspend for the year.
Coun Dadd said the adult learning and skills service was also facing a substantial deficit, so the authority was examining how to overhaul the service.
Corporate director Gary Fielding added while the authority was grappling with “completely unknown factors”, it was “starting to see worrying signs in some areas”.
He said the council was facing massive uncertainty on demand for services, seeing significant increases in demand, particularly for adult social care and children and families.
Mr Fielding said as demand is going up placements for care, especially home care, were becoming extremely challenging.
He said: “We all understand that when supply and demand get out of kilter if demand is higher than supply then you start to feel the financial pressures of that. anticipating “upwards financial pressure” in its supply chain.”
Mr Fielding said unprecedented levels of government funding through Covid were masking numerous issues, as funding for services such as enabling hospital discharges, supporting vulnerable people, community work and preventing infections were due to end.