Taxpayers have been assured that the Government will be lobbied to ensure they get the best funding deal possible with a warning that rural areas must not lose out at the expense of tackling deprivation.

Members of North Yorkshire Council have today (Friday, February 13) approved the authority’s budget for the next financial year amid significant financial challenges.

The Government has conducted a nationwide review of funding for local government with deprivation a key factor on where money is targeted across the country.

North Yorkshire Council’s finances have been hit by a reduction of more than £40 million each year through the Government’s decisions. Even after savings and a 4.99 per cent council tax increase, the decision has had to be taken today to use £17 million in reserves to balance the budget for 2026/27.

The council’s leader, Cllr Carl Les, confirmed that Conservative, Labour and Liberal Democrat MPs who represent North Yorkshire’s constituencies would be urged to continue to petition Ministers to get an improved deal for funding.

Cllr Les said: “We have always made every effort to ensure our taxpayers get the best value for money, but we are faced with major financial challenges. In the 30 years that I have been a councillor, I have never known a budget as difficult as this one has been.

“We have been hit particularly hard by the reforms from the Government, and we will be continuing to ask Ministers to look at the formula for how councils are funded. Our MPs can play an extremely important role in this too, and we will be asking them to lobby the Government for an improved deal.

“I have no issue with funding being used in the areas that need it most to tackle deprivation, but this should not be at the expense of rural parts of the country. We face very specific challenges to deliver vital services across such a vast rural area as North Yorkshire.

“We should have the necessary funding to make sure we can continue to provide these services from highways maintenance and waste collection and recycling to adult social care and support for special educational needs.”

At today’s full council meeting at County Hall in Northallerton, elected members voted to approve the budget which includes a 4.99 per cent increase in council tax.

The Government has indicated that it expects councils to apply a 4.99 per cent increase to council tax – the maximum allowed without having to undertake a referendum with voters – for each of the three financial years over the period of the funding settlement.

The council’s deputy leader, Cllr Gareth Dadd, whose responsibilities include finance, said: “We are acutely aware of the financial pressures our taxpayers are facing during the cost-of-living crisis.

“However, we faced no alternative than to increase council tax bills by 4.99 per cent, given this is part of the Government’s funding settlement. If we had not introduced the maximum increase, we would have been faced with an even more challenging financial situation.

“For every per cent below the 4.99 per cent increase, a further £5 million shortfall would have emerged, and this would significantly affect the council’s ability to deliver key services.”

The council tax rise equates to an increase of £96.78 per year for an average Band D property to a total bill of £2,036.32.

Despite the financial challenges, North Yorkshire Council will continue to provide financial support to the most disadvantaged through a council tax reduction scheme.

The initiative was set up in April 2023 when the council was launched in response to the cost-of-living pressures. Households which apply under the scheme are means-tested and can receive up to 100 per cent reductions on council tax bills if they qualify for support.

Investment includes £60 million for up to five new care and support hubs to help to respond to demand for services. The new facilities are due to replace several council-run care homes located in older buildings. The hubs would provide specialist care for up to 250 people at any one time and at a weekly cost which is lower than the current expenditure.

The budget outlines record increases in funding for the council’s children and young people’s services, especially for children who are cared for by the authority. Numbers of children in care and associated costs have both risen rapidly and a further £15 million in additional funding is included in the budget for 2026/27 to meet the need for support.

A further £1.4 million annually will increase the capacity of educational psychologists to cope with the rising number of education and health care plans (EHCPs).

The pressures on special educational needs and disability services have seen the number of children with EHCPs in North Yorkshire rise sharply from 1,700 in 2015 to more than 6,000 in 2025. The additional funding will curb a reliance on agency workers and build capacity within the council.

Millions of pounds in funding will also be used for a range of housing projects through a 100 per cent premium for council tax bills on second homes. The premium will continue from April this year after being introduced 12 months earlier.

The scheme effectively doubles council tax bills for second homeowners after North Yorkshire was one of the first areas in the country to progress with adopting the new measures. The premium provides more than £10 million annually in funding for the council to specifically finance housing-related schemes.

Following the launch of North Yorkshire Council in April 2023, a plan has been drawn up to achieve more than £130 million in savings, of which £68 million would not have been achievable without local government reorganisation. However, this has still left a predicted £25 million annual deficit by March 31, 2029.

The report on the council’s budget for the next financial year can be viewed or downloaded as a PDF here: North Yorkshire Council budget report