As March 11—the legal deadline for all UK local authorities to set their budgets—draws near, Somerset Council is tackling a complex financial situation. Councils must balance their books annually, often relying on council tax increases to bridge gaps. Somerset Council, however, finds itself in a fragile financial position, scrambling to close an anticipated £73 million shortfall for the 2026/27 fiscal year.
After the local government funding settlement announcement before Christmas, intense behind-the-scenes discussions are underway. Councillors and senior officials are actively engaging with local MPs and government ministers, advocating for fairer funding. Although the budget’s final details won’t be revealed until late January, several developments and potential changes are already shaping the outlook ahead of the critical full council meeting in Bridgwater on February 25.
Council Tax: A Guaranteed Increase, But By How Much?
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Council tax in Somerset is divided among Somerset Council, local town or parish councils, Avon and Somerset Constabulary, and Devon and Somerset Fire and Rescue Service. Legally, Somerset Council’s portion can only rise by up to 4.99% before a referendum is triggered. Of this, 2% is specifically allocated to adult social care, leaving 2.99% for other essential services including children’s care, waste collection, and road maintenance.
Somerset’s relatively low council tax base limits the money it can raise compared to similar unitary authorities like Cornwall, Dorset, and Wiltshire. Last year, the Ministry of Housing, Communities and Local Government (MHCLG) allowed a 7.49% increase without a referendum, reflecting this disparity. Ongoing negotiations aim to secure a similar or higher discretionary increase this year. Council leaders Bill Revans and Liz Leyshon have indicated that proposals for hikes up to 10.99% have been discussed with ministers, though no final decisions have been made or announced.
Meanwhile, local town and parish councils, not bound by the 4.99% cap, are expected to raise their shares as well. In some cases, they have implemented significant raises, particularly where they have taken on additional responsibilities through devolution deals. Bridgwater, Taunton, and Yeovil town councils have agreed to manage major local services and assets, such as the Northgate Docks regeneration project and the Octagon Theatre reopening. This trend suggests further council tax increases at the town/parish level in the future.
Proposals for Savings and Additional Revenue
In early December 2025, Somerset Council’s executive committee outlined proposals to generate approximately £20.2 million in savings in 2026/27 and an additional £4.76 million by 2030/31. Unlike previous years—which often required service cuts—many of these savings focus on raising fees and charges to residents.
For example:
- Charging commercial waste collection rates for 624 holiday lets is expected to bring in around £130,000.
- Increasing marriage registration fees could generate about £48,000.
- Additional £36,000 from raised wedding certificate charges.
- Introducing fees for new garden waste bins, estimated to raise £155,000.
Other anticipated income sources include increasing revenue from commercial operations such as the Port of Bridgwater (tied to Hinkley Point C construction) contributing £100,000 and the recently opened Ham Hill visitor centre near Yeovil adding £20,000.
Exceptional Financial Support: What It Means
The term “exceptional financial support” refers not to new funding from the government but to permission for the council to use proceeds from asset sales to cover day-to-day operating costs—a flexibility not usually allowed. Somerset Council has received this support for the past two years and has applied for a third year, though requesting a smaller amount.
If approved, the council will continue selling commercial investments inherited from the former district councils and various underutilised assets like agricultural land and buildings. However, this approval often comes very close to budget deadlines, meaning contingency plans might be needed if the government delays or denies continued support.
Balancing Revenue and Capital Budgets
Somerset Council sets two separate budgets: the revenue budget, which covers daily service expenses funded primarily by council tax; and the capital budget, which finances infrastructure projects like schools, roads, and regeneration.
Capital funding typically comes from government grants, developer contributions, asset sales, and borrowing. Somerset holds millions in government grants earmarked for regeneration projects such as the health and social care academy in Bridgwater, Tonedale Mill and Tone Works in Wellington, and the Octagon Theatre in Yeovil.
Transportation infrastructure also benefits from government grants, including upgrades to the Edithmead roundabout near Junction 22 of the M5 in Highbridge. However, rising construction costs and potential legal or acquisition issues might delay or scale back some projects.
Challenges Ahead
Ongoing concerns such as the Life Factory scandal in Glastonbury underscore the importance of transparent and proper use of government grants. The council must maintain rigorous financial management to safeguard future funding opportunities.
In summary, Somerset Council faces a challenging budget cycle in 2026, balancing the need for increased revenue with careful spending and strategic use of government support amid ongoing negotiations and economic pressures.