Somerset Council is confronting a severe financial crisis, with an alarming £73 million budget gap threatening its sustainability, according to councillors and external auditors. Despite recent budget proposals that include over £20 million in new savings or increased fees, concerns about the council’s financial health continue to mount.
Clive Heaphy, the council’s interim chief financial officer, acknowledged that Somerset will likely require exceptional financial support from the government for the third year running to avoid depleting its reserves completely. However, members of the council’s audit committee warn that the window for effective recovery is closing fast, raising fears of an impending financial breakdown.
External auditors Grant Thornton have issued three statutory recommendations, or ‘red cards,’ criticizing the council’s sluggish progress in restructuring its services. Taunton resident and council critic David Orr highlighted persistent weaknesses in the council’s ability to plan and implement transformational savings, noting the absence of a clear, actionable pipeline for closing the budget gap beyond 2026/27 without further emergency aid.
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Since the first phase of its transformation program ended in April, which included cutting approximately 300 jobs and saved around £34 million, the council has appointed Newton Consulting Ltd. to oversee the next phase, ‘Inspiring Innovation.’ This new phase is projected to cost £20 million over several years.
Barrie Clarke from Grant Thornton pointed out ongoing financial vulnerabilities, including reliance on one-off government support, pressure on children’s services, and a growing deficit in the dedicated schools grant, which currently remains off the council’s balance sheet until 2028 due to government rules.
Two of the auditors’ red cards relate to longstanding financial stability issues, while the third concerns the abandoned Life Factory project in Glastonbury. Heaphy reported some progress, with the projected overspend for 2024/25 reduced to under £1 million but emphasized the difficulty in moving from reorganization to balanced budgeting.
“We’re striving to reduce our dependence on exceptional financial support—it’s not sustainable,” said Heaphy. “It’s like putting your weekly food bill on the mortgage.”
The council awaits confirmation of its funding settlement from the Ministry for Housing, Communities and Local Government (MHCLG), expected before Christmas. Discussions over the level of exceptional support will likely continue into late January.
Councillor Gwilym Wren warned of “staring down the barrel” of effective bankruptcy, criticizing the lack of urgency in addressing the council’s critical financial recommendations. He voiced concerns about the hollowed-out communities budget, ongoing demand pressures on children’s and adult services, and questioned the council’s capacity to manage its way out of the crisis after significant staffing losses.
Chief Executive Duncan Sharkey acknowledged the widespread nature of such financial challenges among councils and admitted to capacity issues that hamper rapid implementation without disrupting frontline services. He remains cautiously optimistic about setting a budget with reduced exceptional support, but cautioned that change must be paced carefully.
Exceptional financial support, unlike traditional grants, permits the council to sell assets to fund daily operations—an unusual and unsustainable approach.
Councillor Norman Cavill called for transparency in communicating this strategy to the public, stressing that asset sales are not a funding windfall: “If you sell assets to survive, eventually you go down the pan.”
Residents are encouraged to participate in the budget consultation before January 14, available online and in libraries. Committees will scrutinize the proposals over the coming weeks, with final budget decisions expected in late February.
Council leader Bill Revans highlighted the council’s £50 million in savings since its formation but acknowledged ongoing financial fragility amid rising costs and service demand. He urged the public to engage in the consultation, reinforcing the council’s commitment to tough decisions backed by innovation and partnerships.