Council may seek government help to plug £32m gap

City of York Council is forecasting a £32.3m hole in its budget over the next two years and may need government help to balance the books.

A report from the Labour-run authority's director of finance said the council was facing "some of the most significant financial challenges we have ever experienced".

It adds that without making the necessary savings it "may" have to seek exceptional financial support "to avoid the risk of a Section 114 notice", meaning it would have to halt all "non-essential" spending.

Council leader Claire Douglas said: "This is a very significant and a very serious situation that's been many years in the making. We're getting on with the job of dealing with it."

The £32m shortfall is worth nearly one-sixth of the council's entire revenue budget, which is the money allocated for day-to-day spending and services.

In her report, Debbie Mitchell said: "The scale cannot be underestimated.

"Over the next few years, the level of savings required will be significant, and it is likely that some services will reduce — and, in some cases, stop altogether."

She said the council had already made savings of £40m over the past six years, and that it was "difficult" to identify ares where further cuts could be made.

The report said the council had been hit by "two extreme factors" - spending on Adult Social Care, which accounts for 46.5% of the total budget, and a "significant" reduction in funding as a result of the Local Government Finance Settlement.

Mitchell goes on to say spending is also impacted by the fact York residents are "paying less [council tax] than those in almost all other authorities, when living in equivalent banded properties".

She added: "There is a path to balancing the budget, but this would lead to a significant cut to services which would likely impact the most vulnerable individuals in the city and one which would leave the city with poorer performance outcomes, impacting the quality of life for residents.

"The other path is to identify further savings and explore different options for Government assistance, loans or temporary support, in order to provide time to transform the organisation and seek ways to increase the funding base of the council."

The government has been approached for a response to the report.

Council leader Douglas said any decisions about possible council tax increases would be dealt with next year, when the council debates and sets its budget for the 12 months from next April, adding that the authority is "looking at everything" in a bid to plug the gap.

She also said the council was focused on "totally transforming" the social care setup.

"It's not necessarily about stopping things, it's about doing it differently and pushing that as hard as we can," she said.

"The prime minister has already said that social care is breaking the bank, not just for councils but families as well.

"He has committed to supporting us all to make sure we move to a better system."

She added that she and her team were looking at other ways of raising more money to be spent on local services.

"That's to make sure the people of York are supported in not having to pay for all of this. We know household budgets are under pressure," she said.

Responding to the report, Nigel Ayre, leader of the council's opposition Liberal Democrat group, said: "Labour locally and nationally have bankrupted the city.

"The reality is, this report seeks permission to go cap in hand to the government for a payday loan. If the council intend to ask for exceptional financial support, they should be open with the public about what they're asking for, and when."

Conservative group leader Chris Steward said: "It seems any new money from the government would be borrowing with interest.

"Whilst the council says this will give it time to make changes, it has had enough time. We are unconvinced of its ability to deliver improvements."

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