Somerset Council is warning that without continued financial support from central government, it may have to make significant cuts to local services. The council has relied heavily on exceptional government funding, known as a capitalisation directive, to balance its budget for the past two years.
This capitalisation directive allows the council to finance daily operations by using proceeds from the sale of land, property, and other assets—an approach not typically allowed under standard funding rules. Currently, Somerset Council forecasts an overspend of just over £5.4 million for the 2024/25 financial year. Much of the money received from recent asset sales is being reinvested into the council’s transformation programme aimed at improving efficiency.
Clive Heaphy, the council’s interim chief financial officer, has indicated that further government support may be necessary for the 2025/26 financial year. Should this additional backing not materialize, the council will face the tough choice of either making deeper spending cuts or drawing from its reserves to balance the budget.
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During a recent executive meeting in Taunton, Councillor John Cook-Woodman, shadow portfolio holder for economic development, planning, and assets, questioned the plan for balancing the budget if government support ceases. Heaphy responded that ongoing discussions with the Ministry for Housing, Communities and Local Government (MHCLG) are focused on stabilizing finances.
“We need to demonstrate that we can manage our budgets within our income levels,” Heaphy said. “However, the possibility of needing further support remains, and if it is not forthcoming, we will have to carefully examine spending reductions and reserve use.”
The council’s overspend is largely driven by increased demand for children’s and adult social care. Children’s services face a projected overspend of £3.63 million due mainly to costly residential placements, including care placements outside the county. Adult social care is expected to exceed its budget by approximately £1.89 million, with rising use of temporary accommodation being a significant factor.
To address this, the council is investing around £3.4 million to purchase up to 15 properties that will serve as temporary accommodation for local families, thereby aiming to reduce reliance on costly external rentals.
Somerset Council plans to provide a further budget update before Christmas, outlining progress and any new financial strategies.