The Government has confirmed that Somerset Council will not be granted approval to increase its share of Council Tax by more than the 4.99% cap, as local councillors prepare to discuss options and set a balanced budget for 2026-27.
Somerset Council has made savings of at least £50m since becoming a unitary council in 2023. However, its financial situation remains fragile with a budget gap of around £33m for 2026/27 due to ongoing exceptional cost pressures in areas like social care, children’s services and homelessness.
The position is made worse by Government’s decision not to financially recognise authorities which have a large geographical base to cover and whose population is rural. Somerset is in the top 10 most rural authorities in the country
With Somerset Council’s Council Tax levels remaining lower than the national average for similar authorities, Leader Bill Revans has again been in discussions with the Ministry of Housing, Communities and Local Government (MHCLG) to highlight the challenges and request Exceptional Financial Support.
Exceptional Financial Support is not a handout or grant but is permission for councils to raise Council Tax above the national cap of 4.99% and/or a Capitalisation Direction (a form of one-off assistance which allows councils to pay for day-to-day spending over a number of years funded by additional borrowing or selling assets).
MHCLG has now confirmed Somerset Council will not be allowed to raise Council Tax by more than the national cap of 4.99%. Confirmation on whether the Government will allow a further Capitalisation Direction will follow in due course.
The Council will now consider carefully the implications, which are likely to require further damaging cuts to services and long term changes.
Cllr Revans said:
Clearly no-one wants to increase Council Tax but this announcement means Somerset will remain at a disadvantage due to historic decisions and we will continue to have less funding to deliver important services for our residents. We will face further difficult and heartbreaking choices about council services and charges.
Government uses a notional Band D Council Tax figure of £2,060 to calculate funding entitlements for councils. We will remain below this level by more than £100. Government have shifted responsibilities to councils, but without giving us the ability to raise income to the levels needed, and without taking into account historic decision making by predecessor authorities.
I have repeatedly said that Council Tax is not a fair way to pay for services like social care. This is not just my view – it was echoed by the cross-party Select Committee last year which called for urgent reform of a ‘broken’ system. Our residents continue to pay more and receive less.
We received some good news on Special Educational Needs and Disabilities budgets with the Government committing to paying off 90% of historic deficits. We’ll need to see the detail and will continue to lobby for comprehensive reform of the SEND system.
This week’s announcement on Council Tax gives us clarity and we will need to consider the implications carefully before we finalise our budget proposals for debate and decision at Full Council later this month.
Somerset Council’s budget will be discussed at the following meetings
- 11 February: Executive meeting focusing on HRA rent setting for 2026/27
- 23 February: Scrutiny, Corporate and Resources
- 25 February: Extraordinary Executive to consider budget, including proposed savings, growth, fees and charges, Council Tax setting, and HRA budget recommendations
- 4 March: Rescheduled Full Council meeting to set the 2026/27 budget
- 6 March: Reserve Full Council dateAgendas and papers will be published in advance with the public encouraged to attend the meetings, either in person or online.
