Auditors have issued a warning to North Somerset Council, emphasising the need for the authority to identify further savings to safeguard against the possibility of another exceptional council tax increase.
Last April, the council received government approval to exceed the standard 4.99% council tax cap, implementing a one-off rise of 8.99%. Despite this substantial increase alongside £20 million in budget cuts, the council continues to confront a significant budget shortfall.
Current efforts are focused on addressing a forecasted budget gap of £12.1 million for the next financial year, which contributes to an overall £40.6 million shortfall spread across the coming four years. However, external auditors from Grant Thornton caution that considerable work remains to avoid resorting to further exceptional financial support (EFS).
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In their draft annual report, presented to the council’s audit committee on 24 September, the auditors acknowledged progress in restructuring council services to reduce costs. Nonetheless, the report underscored that substantial measures must be embedded rapidly and effectively to deliver savings at the required scale.
Exceptional financial support refers to the government’s emergency provision allowing councils facing financial distress to exceed the council tax cap. This support does not entail direct funding from the government but permits councils to fund their revenue budgets through borrowing, asset sales, or council tax increases beyond the usual limits.
Last year, the council sought exceptional financial support to address a £25 million budget gap. For the next financial year, this gap is predicted to be £12.1 million. Council leader Mike Bell, speaking at the cabinet meeting on 16 September, noted that this forecast had doubled since February, mainly due to rising social care costs. He clarified that this projection already assumes a council tax increase at the standard 4.99% cap and did not indicate an imminent need for further exceptional financial support.
Following the meeting, Mr Bell commented, “Residents have already faced a substantial council tax increase, and we appreciate the strain this places on household budgets. They deserve a transparent explanation of why the council still has a funding gap and the steps we are taking to address it.”
He highlighted the central issue of fair funding for social care, explaining that nearly every additional pound from council tax is absorbed by escalating social care expenses, leaving limited funds for other essential services. He criticised the current system, which relies on a property-based tax system established 35 years ago, for disproportionately impacting modest homes and failing to adequately consider taxpayers' ability to pay.
“Council taxpayers cannot continue to shoulder the costs of a national care funding crisis. Proper government funding for care services is imperative,” Mr Bell added. The council allocates 65% of its budget to care and support services for adults and children, early years provision, and welfare, with these costs continuing to rise.
Mr Bell also announced an upcoming engagement exercise aiming to gather residents’ views on which council services are most valued, to help shape forthcoming budget proposals. The public will have further opportunities to comment on the draft budget when it is published in December.
The council is facing reduced funding from central government, amounting to an £18.6 million cut over three years. Specifically, a decrease of £6.2 million is expected for the 2027/28 financial year. Notably, the additional income generated from the April 8.99% council tax rise was approximately £6 million annually.
A draft budget for 2027/28 is scheduled for release, with public consultation to follow before the full council votes on the final budget in February 2027.