£14m children’s services overspend sparks fresh warning over North Yorkshire Council finances

Serious concerns have been raised by the Liberal Democratic and Liberal Group at North Yorkshire Council about the state of the Conservative-led Council’s finances, following the revelation of a startling increase in costs associated with supporting children and young people in care.

Papers released for the Executive meeting on Tuesday 18 August, included a financial statement for the first quarter of 2026, showing a £10.3m overspend, above the signed-off budget position that expected a £17.1m deficit for the year as a whole. The overspend for Children and Young People’s Services was £14.2m against a budget of £159m, with £11.7m of this figure being costs associated with an increase in looked-after children.

There are now 654 looked-after children across North Yorkshire, compared with 472 looked-after children at the beginning of the new Unitary Authority.  This is an increase of almost 40% in just three years, with the biggest jump in the first quarter of 2026, rising from 613 o 654.  41 more children are in care in early 2026because the Council has failed to address their needs early enough. According to the latest Department for Education statistics, the number of looked-after children across England has fallen from a recent peak of 83,750 in 2023 to 81,770 in 2025.

Cllr Peter Lacey, leader of the Liberal Democrats and Liberal main opposition group on the Council said:

“We must ask serious questions about this administration’s failure to get ahead of the growing needs of children and families. This is not simply a failure for families who may have been spared the hurt and distress of a child entering care with the right support at the right time; it is also putting the long-term sustainability of Council finances at risk.

“Year after year, our financial reports have highlighted the growing pressure from rising demand for children’s services. Those warnings have not been acted on, and we are now seeing the consequences.

“The Conservative administration’s response to budget pressures has been to rely on the one-off savings created by becoming a unitary authority - a pot that is now effectively exhausted - leaving it increasingly dependent on the large reserves inherited in 2023, that are now dwindling. Instead of using those strategic reserves to invest in prevention and early support, they have been used to plug ongoing deficits and cover the costs of poorly managed capital schemes.

“We need a different approach: one that tackles problems earlier, supports families before they reach crisis point, and uses Council resources to prevent costs from escalating rather than simply paying for the consequences.”

“Since the new Council was established in 2023, the Liberal Democratic and Liberal group has repeatedly called for greater investment in prevention. Those calls have gone unanswered, and the Council is now paying the price.”

Cllr Lacey continued: 

“Each year, we are told that the greatest risk to our long-term financial position - which still shows a deficit budget by the end of the three-year planning cycle - is the rising demand in ‘people services’. That means families with children and young people who expect North Yorkshire to be a great place to grow up in, are being failed by the Council."