North Somerset is undergoing a remarkable transformation. From the restoration of Birnbeck Pier and the reopening of the Portishead railway to the redevelopment of the Tropicana as a nationally significant venue and the long-awaited construction of the Banwell bypass, the region is bustling with major projects.
Yet, North Somerset Council faces a paradox. While spearheading these high-profile developments, it has raised council tax by an exceptional 8.99% and warned it is at risk of financial insolvency. How can the council afford such significant projects amid budgetary pressures?
The key lies in understanding the distinction between the council’s two separate budgets: the revenue budget and the capital budget. The revenue budget covers day-to-day running costs—staff salaries, public services, and maintenance—funded primarily through council tax, government grants, and service charges. This budget is under intense pressure, largely due to soaring costs in social care for vulnerable children and adults, which now consumes £62 of every £100 spent. Rising demand plus government funding cuts have squeezed resources, leading to tough choices like closing libraries and reducing bin collections.
In contrast, the capital budget finances one-off infrastructure projects funded largely by external grants and capital receipts. North Somerset Council has been highly successful in competing nationally for substantial capital funding. Major backers include the government’s Department for Transport providing funds for the Portishead railway, the National Lottery Heritage Fund and Historic England supporting Birnbeck Pier restoration, Levelling Up funds revamping the Tropicana, and Homes England financing the Banwell bypass.
By law, money allocated to capital projects cannot be diverted to cover revenue costs, which explains the council’s simultaneous struggle with day-to-day finances while advancing major developments. This dual budget system allows the council to transform the area’s infrastructure without directly alleviating its operational financial shortfalls.
The council also invests its own capital funds to leverage additional government contributions, such as putting in £3 million for the railway and nearly £12 million for the bypass. While capital projects still incur administrative costs paid from the revenue budget, this strategic approach has unlocked over £450 million in investment, delivering lasting improvements in transport, leisure, education, and housing.
However, capital schemes are not without risk. Borrowing to fund projects can lead to future revenue liabilities, and poor investments have previously resulted in losses, such as the expensive Carlton Street Car Park deal.
Beyond headline projects, the council manages 170 capital schemes, including smaller roadworks and infrastructure replacements like the Winterstoke Road Bridge, supported by the Ministry of Defence.
North Somerset Council emphasizes that these investments are more than just construction—they are commitments to enhancing the quality of life for residents, creating opportunities for businesses, and securing a prosperous future for the community.