The Ministry of Housing, Communities and Local Government have confirmed that Somerset Council’s request for £30m Exceptional Financial Support has been approved in principle. £25m will be used to cover a budget gap and £5m to support the further transformation of services.
Latest papers for the Executive meeting on Wednesday 25 February show Somerset Council has taken steps to significantly reduce its projected funding gap from £101m in March 2025 to £25m in February 2026.
The Government has now confirmed Somerset will be able to close the remaining gap using Exceptional Financial Support (EFS) in the form of a Capitalisation Direction (this allows councils to pay for day-to-day spending over a number of years funded by additional borrowing or selling under-utilised assets).
Cllr Bill Revans, Somerset Council Leader, said: “This confirmation is welcome but it’s important to note that EFS is not a bailout or extra funding.
“In fact, as we’ve previously highlighted, Somerset recently lost around £21m each year as a result of the recent so-called fair funding review which removed support for councils delivering services in rural areas, even though these usually cost substantially more to deliver.
“We continue to receive less income from Government due to the way grants are calculated based on the average council tax bill – and we will receive nothing from the Government’s £1bn recovery grant.
“We have taken a number of decisive actions ourselves to protect frontline services while also avoiding the threat of a S114 notice. However, it is clear the funding system for local councils is broken and we urgently need a better way to pay for demand-led services like social care.
“We welcome further scrutiny of our finances, and I would recommend anyone seeking to understand the historic causes of our financial situation to read the CIPFA report that is very clear on the cause of the financial issues Somerset Council faces being the reckless freezing of council tax for six years by Somerset County Council.”
Following the successful EFS application, Somerset Council will be required to undergo an external assurance review. This is a standard condition attached to EFS and is designed to provide government with independent assurance on the Council’s financial position and governance. Previous reviews have been published.
Somerset Council’s Executive will discuss the budget on 25 February, which will include a recommendation to increase Council Tax by 4.99%. If approved, this will mean the average Band D property in Somerset will pay £1,950.30 year – a figure that remains lower than the average unitary council, and less than neighbours in Dorset, Wiltshire, and Cornwall.
The papers also highlight five priority areas identified for investment as part of the Inspiring Innovation transformation programme which aims to provide better outcomes for residents at a lower cost. Current investments of £15.3m are forecast to return £20.6m of savings, with further work underway to develop the other opportunities identified which could potentially save between £31m to £57m by 2030/31.
Final decisions on the budget will be taken by Full Council on 4 March.
Agendas and papers will be published in advance with the public encouraged to attend the meetings, either in person or online.
