North Somerset Council has announced it will “almost certainly” need to increase council tax beyond the usual 5% cap, after facing a significant shortfall in government funding. The council is formally requesting exceptional financial support from the government to raise council tax above the capped levels.
Council leader Mike Bell addressed the council cabinet on December 10, expressing grave concerns about the financial outlook. He warned, “I cannot guarantee we can avoid a section 114 notice and potential bankruptcy without exceptional financial support.” Bell emphasized that a recent change in the government’s funding formula is drastically reducing local service budgets, describing it as “the straw that has broken the camel’s back.”
Initially, the “fair funding review” predicted a £17.4 million loss in government grants for North Somerset over three years. Revised figures now indicate a loss of £23.8 million, intensifying the council’s budgetary challenges.
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Bell highlighted that North Somerset has historically maintained one of the lowest council tax rates in the region. While attractive initially, this has resulted in less revenue annually. Combined with funding cuts and increasing social care demands, the council faces an ever-widening budget gap.
Despite identifying significant savings and efficiency measures through its productivity and transformation programme, a substantial deficit persists. The council’s reserves are insufficient to cover this gap.
“To continue delivering vital services and avoid a looming financial crisis, higher council tax increases are unavoidable,” Bell stated. Without these rises and government permission for exceptional financial mechanisms, crucial services—including social care, vulnerable children’s support, and basic infrastructure—will endure further cuts, limited to minimum legal requirements.
Exceptional financial support does not involve direct funding but grants councils permission to exceed council tax caps or borrow to generate savings. Typically, council tax increases are capped at 3%, with an additional 2% allowed for adult social care. Last year, Somerset Council received approval to raise tax by 7.5% using this provision.
Bell stressed that applying for exceptional support is a last resort, driven by historical low tax levels and uncontrollable demand and costs in social care. He assured, “Every pound raised will directly protect essential services, especially for vulnerable residents, and we will maintain full transparency.”
When asked about avoiding a section 114 notice, Bell responded cautiously, “Hopefully, but not necessarily,” citing soaring social care costs. He warned that escalating expenses might soon outstrip all available budgets, and exceptional financial flexibility may only offer temporary relief.
“Only systemic change can resolve this crisis,” Bell urged. “Exceptional support will aid us through 2026/27 but won’t fix the fundamental issues.” He criticized the government’s redistribution approach that penalizes efficient, low-tax councils like North Somerset to benefit others.
Previously, Bell revealed that some children’s care packages cost the council hundreds of thousands, with expenses quadrupling recently, while revenue capacity remains limited.
Last year, the council used £9.1 million from reserves to balance the 2025/26 budget but still faced major cuts. Measures include likely closure of three local libraries, cancellation of the council magazine, and freezing councillors’ allowances—moves that one councillor said will “strip services to the bone.”