Somerset Council is set to approve a balanced budget for the upcoming year, despite ongoing financial challenges that keep the council on the government’s “naughty step.” The executive committee convened in Taunton for a full-day meeting to provisionally approve the budget, which will be presented to the full council for final approval on March 4.
The proposed budget includes a 4.99 percent increase in the council’s portion of council tax, representing the third consecutive year of exceptional financial support from the Ministry of Housing, Communities and Local Government (MHCLG). However, this financial relief has its limits. Clive Heaphy, the council’s interim chief financial officer, cautioned that Somerset will not receive a fourth year of extraordinary funding, heightening the urgency for tighter fiscal control to avert financial insolvency ahead of the next local elections.
Heaphy’s Section 25 report, assessing the council’s financial viability, highlighted the limited gains from the government’s fair funding review, attributing this to Somerset’s rural character. Nearly half of Somerset’s 290,000 residents live in rural communities, which, combined with a rapidly aging population, presents unique budgeting challenges.
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Recent developments have provided some relief. The Department for Education (DfE) announced it would write off up to 90 percent of Somerset’s Dedicated Schools Grant (DSG) deficit, contingent on the council implementing measures to control future spending on children with special educational needs and disabilities (SEND). However, Heaphy emphasized that this should not be mistaken for “free money,” given the rising demand for SEND services.
Through a capitalisation directive, MHCLG will extend exceptional financial support into 2026/27. This allows Somerset to temporarily fund operational costs through borrowing or asset sales, a practice usually restricted. The council will access £30 million in support, reprioritized from the previous year rather than as new funding—£25 million will close the budget gap while £5 million will fuel an ongoing transformation program aimed at reducing costs.
Local government minister Alison McGovern MP has voiced significant concerns about the pace of Somerset’s transformation efforts following auditor reports. She stressed that swift, decisive action is expected to mitigate risks and improve financial recovery plans. An external assurance review is planned to scrutinize the council’s progress and determine if further intervention is needed.
Heaphy warned that this budget marks the final year for exceptional government backing. As the council approaches the 2027/28 budget cycle, coinciding with local elections, it must assert control over its financial future—primarily through cost reductions or transformative initiatives. He stated, “The government is clearly saying: ‘you’re on the naughty step, and you’ve still got more work to do.’ Yet their continued support indicates confidence in the council’s trajectory toward recovery.”
Council leaders expressed cautious optimism. Portfolio holders acknowledged the benefits of asset sales and partnerships in easing financial pressures, while emphasizing ongoing challenges such as the phosphate crisis, which has delayed around 12,000 homes due to environmental mitigation requirements.
Deputy leader Liz Leyshon noted Somerset’s council tax rates are expected to remain competitive compared to neighboring areas, with government limits preventing above-referendum increases for 2026/27.
Transport and waste services portfolio holder Richard Wilkins highlighted the disproportionate burden rural councils face in addressing infrastructure and emergency response costs, especially after incidents like recent flooding and Storm Chandra. He criticized the government’s handling, saying, “To say the government has left Somerset high and dry is both accurate and highly inappropriate.”
The full council will finalize the budget at the Canalside conference centre in Bridgwater on Wednesday, March 4, at 11 a.m.