THE organisation which runs York’s libraries has built up a deficit of almost £900,000 after being underfunded by City of York Council for the past five years.

But Explore York is confident it can pay back the debts after winning a new contract from the authority which will provide significantly better funding and should put it into surplus.

The mutual’s annual report shows that it lost about £650,000 in the last financial year to March 2018 and is likely to lose money again in the current financial year, with net current liabilities of £876,853 at March 2018.

However, the report says: “Forecasts for the year ended 31 March 2020, which is the first year of the new contract, show that as a result of increased income and identified cost savings the society will make a surplus.

“It has been agreed that the final balance owed to City of York Council at 31 March 2019 will be repaid over a period of four years.”

Charlie Croft, assistant director for communities and culture at the council, said experience gained from the first libraries’ contract had shown that the service was insufficiently funded.

“This was confirmed during the procurement exercise for the new contract, which commences on April 1,” he said.

“The new contract, which includes the additional £300,000 funding allocated by full council on February 28, will ensure that York can retain the same number of staffed-libraries and continue to provide a high quality libraries and archives service over the next 15 years.”

Fiona Williams, chief executive of Explore York Libraries and Archives Mutual, said the losses had resulted from a change in accounting treatment of its assets that were used to fulfil the core contract with the council, along with the previous contract for the last five years having been underfunded.

“Natural wastage has created some savings but we have budgeted for all libraries to continue to have paid staff and for no libraries to close,” she said.

“City of York Council are providing us with additional funding over the first four years of the contract to make up for the underfunding over the last few years,” she said.

“We will continually monitor costs and income with the council to ensure they are in line with the budgets.

“We are investigating additional income generating opportunities.

“Now we have won the contract we can proceed with these. One example is an online image library using the many photos etc of York that are held in the archive.”

Explore took over operating the city’s libraries and archives services five years ago, and is a community benefit organisation, with a board of York people, which runs 14 libraries.