Council tax bills in Somerset could rise by 7.5% in a bid to prevent the local authority from going bankrupt. Somerset Council has been granted special permission by the government to increase the amount residents in the county pay - above the national cap of 5%.
The announcement follows a bid by the council for 'exceptional financial support' from Westminster as part of its budget setting for 2025/26. It is currently facing a funding gap of £66m for the period.
Since its creation in April 2023, the council has been taking emergency action to reduce costs and has said it plans to save a further £47m next year, including £34m by reducing the number of staff and managers employed by April this year. But increasing cost pressures in children’s and adults social care has left the authority struggling financially.
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Leader Bill Revans wrote to Angela Rayner MP, secretary of state for housing, communities and local government, to highlight the challenge and request permission to increase council tax 2.5% over the usual cap.
Without the increase, the council warned it may be forced to issue a Section 114 notice, effectively admitting insolvency and inviting central government commissioners to intervene at the expense of taxpayers. The council will now meet to decide whether to agree to the tax rise.
“Today’s announcement gives us clarity and we will need to consider the implications before we finalise our budget proposals for debate and decision at Full Council later this month," said Mr Revans.
Somerset Council has said the increase in tax will not raise enough money to fill the funding gap so it will be reliant on a so-called capitalisation direction - a form of one-off assistance allowing councils to sell assets or borrow money and use the proceeds to fund budget gaps and day-to-day running costs.
Mr Revans said the council had done "everything" to reduce costs with a series of "unprecedented and heart-breaking decisions" since 2023.
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"We are determined to take decisions locally, remaining accountable to our residents, rather than calling in expensive commissioners who would take the same actions without local knowledge or accountability," he added.
"We recognise that any increase in council tax will have a significant impact on our residents and have pledged to increase funding to our exceptional hardship fund, in place to provide support for residents on the lowest incomes."
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