North Somerset Council has been advised by external auditors to identify additional savings to minimise the likelihood of requiring another exceptional council tax increase.
Last April, the council received government approval to exceed the standard 4.99% limit for a one-off council tax rise of 8.99%. Despite this increase and £20 million in budget cuts, a significant budget shortfall remains a pressing concern.
Current efforts focus on addressing a forecasted £12.1 million budget gap for the next financial year, which forms part of a £40.6 million deficit expected over the next four years. However, auditors highlight that substantial work remains to ensure the council can avoid relying on further exceptional council tax hikes.
In their draft annual report presented to the council’s audit committee on 24 September, external auditors Grant Thornton acknowledged progress in restructuring council services to reduce costs. Yet, they emphasised the need to implement these changes swiftly and effectively to enable substantial savings and mitigate the risk of requiring additional exceptional financial support (EFS) in the future.
EFS is a government mechanism allowing councils facing financial difficulties to raise revenue beyond usual limits through borrowing, asset sales, or increased council tax rates. It does not provide direct government funding but grants permission for alternative revenue-generating measures.
Last year, the council sought exceptional financial support due to a £25 million budget gap. The forecast for the upcoming year shows a reduced but still significant gap of £12.1 million. Council leader Mike Bell, addressing the cabinet on 16 September, noted that this shortfall had doubled since February, primarily due to rising social care costs. The forecast already assumes a council tax increase up to the standard 4.99%, with no current indication of a further exceptional rise.
Following the meeting, Mr Bell stated, “Residents have already endured a substantial council tax increase, which we know impacts household budgets. They deserve transparency about why the council continues to face funding challenges and our plans to address them.”
He highlighted that “the core financial pressure stems from the need for fair funding for care. The majority of council tax revenue is absorbed by social care costs, limiting funds for other essential services. Unfortunately, the government continues to rely on an outdated property-based tax system that disproportionately affects modest homes and overlooks taxpayers’ ability to pay.”
“Council taxpayers should not bear the full burden of a national care funding crisis. It is crucial that the government provides adequate support for care services.”
Currently, approximately 65% of the council’s budget is allocated to care and support services for adults and children, early years initiatives, and welfare, with these costs continually rising.
Mr Bell also announced an upcoming public engagement to gather residents’ views on which council services are most important, to help inform budget proposals. Following this, a draft budget will be published in December for public comment.
Additionally, government reforms are set to reduce funding to the council by £18.6 million over three years, including a £6.2 million decrease in 2027/28. The extra revenue from the 8.99% council tax rise last April generated around £6 million annually.
The council plans to release its draft budget for 2027/28 later this year, with full council approval scheduled for February 2027 following public consultation.