£38m 'financial abyss' warning prompts call for help from new chancellor who studied in York

The new chancellor who studied in York should step in to stop the city losing funding potentially worth tens of millions of pounds, an opposition councillor has said.

Coun Nigel Ayre, leader of York Council’s Liberal Democrat opposition, said John Healey should stand up for the city where he was educated and reverse national funding changes which could cost it £38 million.

Coun Claire Douglas, the council’s Labour leader, said the change in chancellor and Andy Burnham becoming prime minister provided an opportunity to rebuild the relationship between local and national government.

Labour Chancellor Mr Healey has said the Government had never before been so serious about passing power from Westminster to local areas.

The call follows warnings in recent months about the impact on York of the national Fair Funding Review.

Proposals drawn up following the review, launched under previous Prime Minister Keir Starmer, would change the way cash from the Government is allocated to councils if they go ahead.

Ministers have said changes are needed to ensure public services are properly funded and cash reaches more deprived areas where it is needed most.

They added it would see funding given to local areas increase overall by £3.4bn over the next three years, with councils consulted on the changes in the summer last year.

But officials in York have warned the changes would leave the council the lowest-funded authority per head in the country by 2028-9.

Council reports on its budget estimated earlier this year the loss in funding in the coming years could be as high as £20 million.

The latest national core spending power figures for councils put the loss as high as £38.4 million by 2029.

New prime minister Mr Burnham, who took office on Monday, July 20 and his chancellor Mr Healey have not yet confirmed if they plan to press ahead with the changes.

Speaking following the changes in Whitehall last week, York Liberal opposition leader Coun Ayre said the new chancellor had the opportunity to prove the city would not be short-changed.

The councillor added Mr Healey should remember his connection to the city, having gone to Sixth Form at St Peter’s School.

Coun Ayre said: “The chancellor knows York, he studied here, he understands our city and he knows what makes it special.

“Under the previous prime minister, York has been left as the lowest-funded unitary council in England by some distance. That’s an obvious injustice, and one we hope the new Chancellor will recognise and correct.

“York’s Labour politicians have failed to stand up for a fair deal for York, Starmer’s Government ignored the financial abyss.”

Coun Douglas, York Council’s Labour leader, said her party had always stood up for the city and would continue to make the strongest possible case for a fair funding settlement.

She added the Liberal Democrats were part of the Coalition Government with the Conservatives that oversaw the austerity programme which had left councils under enormous financial pressure.

The council leader said: “What gives me confidence is that we now have a new prime minister who understands local government, after years of councils being left to struggle.

“We’ve already seen the Government move quickly to take practical steps that will make a difference for people here in York.

“I’ll keep working with Government making the case for York and fighting for the fair funding our city needs and deserves.”

Speaking on the launch of the Manchester-based No10 North last week, Chancellor Mr Healey said the Government was ushering in a new era of devolution.

The chancellor said: “No10 North sits at the heart of that plan, this is the way we signal real change and the way we get it done.”