The impact of national changes on funding for rural counties has been highlighted as Somerset Council prepares to set its budget for 2026-27.
Latest papers show Somerset Council has taken steps to significantly reduce its projected funding gap from £101m in March 2025 to £25m in February 2026.
However, the reports also reveal how the Council’s finances have been further impacted by the Government’s recent fair funding review.
Cllr Bill Revans, Somerset Council Leader, said:
We’re doing everything we can locally to balance our budget, but our position has been made much more challenging by the Government’s decision to remove the remoteness factor in its calculations.
Clearly it costs more to deliver services like road maintenance, waste collections and school transport in geographically-spread, rural areas like Somerset.
We estimate we’re losing around £21m as a result of this change – the third highest reduction in the country.
We’ll be asking the Government to publish their findings and explain how this is in any way fair funding, particularly when Somerset also receives nothing from the Government’s £1bn recovery grant.
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.
Cllr Revans added:
The Government uses a notional Band D Council Tax figure of £2,060 to calculate funding entitlements for councils, but our income is much lower. It’s worth noting that if we actually received this level of funding then we would not have a budget gap.
We’re being hit twice – not only do we receive less income from Council Tax but it also means we receive less funding through grants. We’re also being penalised for being a rural authority.
Once again, this highlights why the system is broken and public services will continue to suffer until we have an overhaul of Council Tax to ensure local government is properly funded.
In order to close the remaining £25m gap, Somerset Council will need to reduce cost pressures, find further savings through transformation, and again request Exceptional Financial Support (EFS) from Government. This will be in the form of a Capitalisation Direction (a 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).
Somerset Council’s budget will be discussed at Executive on 25 February, before final decisions are 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.
