Somerset Council Leader Bill Revans has repeated calls for the Government’s planned reform of local government funding to be accelerated as councillors met on Wednesday (March 5th) to vote through plans for a 7.49% council tax hike.
The balanced budget for 2025-26 was set using Exceptional Financial Support (EFS) measures offered by the Government, which includes increasing the Council Tax by 7.49% – above the referendum limit of 4.99% – and a capitalisation direction of £43m.
Capitalisation direction is a form of one-off assistance which allows the Council to finance everyday revenue costs by selling assets or borrow money.
Cllr Revans says: “With costs and demand for our services continuing to soar, we have had no choice but to ask the Government for Exceptional Financial Support.”
“But let’s be clear, this is not a bailout or a long-term solution. We are asking our residents to pay more, and we will be required to sell our assets or borrow money to cover every day running costs.”
“It is clear the funding model is broken and I welcome the Government’s commitment for reform to funding in key areas of pressure like social care and Special Educational Needs and Disabilities (SEND).”
“The situation for local government remains critical and we need action urgently, or councils like Somerset will simply run out of money.”
Members attending the Council’s annual budget setting meeting on Wednesday were told the Council is facing a budget gap of £52.2m for next year, despite finding new savings of £48m which includes £34m of savings agreed by significantly reducing the number of staff and managers employed.
By agreeing to increase Council Tax by 7.49%, above the usual cap of 4.99%, this will reduce the gap by approximately £9.2m a year, leaving a £43m gap which will be covered by the capitalisation direction.
The Council Tax increase means those living in a band D property will pay an additional £129 a year, or £2.49 a week, and means bills for Council Tax payers in Somerset will remain below the national average.
All the financial papers, including Revenue and Capital Budgets and the Medium Term Financial Strategy from 2025-26 to 2029-30, can be found online here.
