City of York Council outlines scale of future budget challenge
City of York Council is preparing for one of the most significant financial challenges in its history, as increasing demand for services, rising costs and national funding changes are all placing significant pressure on its plans to set future budgets.
A report to the council’s Executive next month will outline the scale of the challenge facing the authority over the coming years and set out the work already underway to ensure the council can continue delivering services residents rely on.
Like councils across the country, York is experiencing growing demand for services, particularly Adult Social Care (ASC), alongside rising costs linked to energy, inflation and borrowing.
Current projections indicate a budget gap of around £32 million between 2027/28 and 2029/30. This is an increase from previous forecasts of around £20 million when the council’s 2026/27 budget was approved, increasing mainly due to national funding changes.
ASC services support people of all ages across the city and the council has a legal duty to meet eligible needs. ASC budget pressures are impacting councils across the country, driven by growing demand, increasingly complex needs and wider pressures across the health and care system.
The council is continuing work on a long-term programme of reform within ASC, aimed at ensuring support remains sustainable while delivering the right outcomes for residents.
The report also highlights wider challenges facing York. Following the Government’s recent Fair Funding Review, York remains one of the lowest-funded unitary councils in England.
While Council Tax generates an important source of income for local services, increases in local income in the years ahead will be largely offset by reductions in central government funding.
Alongside this, work is ongoing across the organisation to identify efficiencies, modernise services and ensure value for money.
The report addresses some common misconceptions about council finances, making clear that funding allocated to major infrastructure schemes and capital projects cannot generally be used to support day-to-day services such as Adult Social Care, Children’s Services, waste collection or other frontline services.
Cllr Claire Douglas, Leader of City of York Council, said:
“Local government faces a very different financial environment to that seen just a few years ago, especially for York. Demand for services is rising rapidly, particularly in Adult Social Care, costs continue to increase while national funding has reduced.
“We have a strong track record of managing our finances responsibly and have delivered millions of pounds in savings while continuing to provide vital services for people across the city. However, the scale of the challenge we now face is significantly greater than in previous years.
“We remain committed to protecting services and we’re continuing to make the strongest possible case to government for a fairer funding settlement for York.”
Cllr Katie Lomas, Executive Member for Finance, Performance and Major Projects, added:
“We’re examining every opportunity to reduce costs, improve efficiency and make the best use of public money.
“Only two years ago York was recognised as the most productive council in the country and we will continue building on that work. We’re modernising services, improving the way we use technology, reviewing how we work and looking at appropriate opportunities to generate additional income.
“There are no easy solutions to challenges of this scale, but we have a clear understanding of the issues we face and a determination to address them.
“It’s also important people understand that one-off funding secured for major capital projects cannot simply be redirected into everyday services we must fund every year. Different rules apply to different types of funding, and in many cases that it comes from external sources specifically for those projects.
“While the challenges are significant, we’re taking action, planning for the future and working closely with government, including exploring all available options to ensure the council is able to move forward on a stable financial footing.”
The Executive report will be considered at a meeting of the council’s Executive on 3 November.