North Somerset Council has announced it will almost certainly need to raise council tax beyond the usual 5% cap, as it faces a significant shortfall due to reduced government funding. The council is formally seeking permission from the government to exceed the cap, under provisions for exceptional financial support.
Council leader Mike Bell highlighted the gravity of the situation at a cabinet meeting on December 10, stating, “I cannot give you an assurance that we can avoid a section 114 and a bankruptcy position without exceptional financial support.” He criticized recent government changes to the funding formula, which have drastically reduced the council’s budget, describing it as “the straw that has broken the camel’s back.”
Initially expecting a funding loss of £17.4 million over three years due to the “fair funding review,” a revised calculation now estimates the loss at £23.8 million. Bell explained that North Somerset has historically maintained one of the region’s lowest council tax rates, which, while attractive, results in less annual revenue. Combined with increasing demand and funding cuts, the budget gap has widened beyond what reserves can cover.
The council has identified substantial savings through efficiency and transformation programmes, yet a funding deficit remains. Bell asserted that raising council tax beyond the usual limits is unavoidable if the council is to maintain essential services and prevent a financial crisis. Without the ability to raise additional funds via exceptional financial support, social care, support for vulnerable children, and basic infrastructure will face deeper cuts.
Exceptional financial support allows councils to raise funds through methods usually restricted, such as exceeding the council tax cap or borrowing to invest in savings schemes. Normally, council tax increases are capped at 3%, with an additional 2% permitted specifically for adult social care. For comparison, Somerset Council was granted permission to raise its council tax by 7.5% last year under similar provisions.
Bell emphasized that applying for exceptional support was a last resort, blaming historic low council tax rates combined with uncontrollable social care demands. He assured residents that all additional revenue from increased council tax would be used exclusively to protect critical services, especially for vulnerable populations, with full transparency on spending.
When asked if exceptional support would prevent a section 114 notice—a formal declaration of financial insolvency—Bell expressed cautious optimism but warned that rising social care costs may eventually overwhelm all funding solutions. He stressed that only systemic government reform can resolve these fundamental funding challenges.
Bell also highlighted the stark reality that some children’s care packages now cost hundreds of thousands of pounds, with these expenses quadrupling in recent years without a corresponding rise in council income.
Last year, the council balanced its 2025/26 budget by using £9.1 million from reserves but still faced cuts so severe that councillors expressed concern they would “strip services to the bone.” Proposed cuts include closing three local libraries, canceling the council magazine, and freezing councillors’ allowances.