Agenda item

Update on Somerset Council's Financial Position


Somerset Councillor Liz Leyshon, Lead Member for Resources and Performance gave an update on the financial emergency declared by Somerset Council. She advised that the forecast deficit for the current financial year had improved and now stood at £18.7 million but this was mainly one-off savings. She explained there was a daily meeting at the Council to tackle the emergency and that things were moving at pace. One option would be to declare a S114 notice but advised that this was not designed for when councils run out of money and it wasn’t fit for purpose. Another consideration was a Capitalisation Direction,  which is the means by which the Government permits local authorities to treat revenue costs as capital costs. Other areas being explored are the sales of assets including some council offices which have very low occupation. Also, to do a proper restructure of the council and slim it down.


She spoke about the options surrounding increases in Council Tax and explained that the base rate in Somerset was low in comparison to other nearby councils. The maximum that Somerset Council could raise Council Tax by was 5%. To increase by more than this would need Government permission.


Councillor Leyshon made reference to the letter sent by the Leader, Councillor Bill Revans, to all Parish and Town Councils in Somerset, asking if any would be willing to take on some of the services to assist with the financial emergency. It was recognised that Parish Councils would be setting their precepts shortly and so would need to consider requests for extra funding if they were to take over some services.


During the discussion, there were a number of comments made, including:


  • What are the insurance implications for Parish/Town councils if they were to take on some services?
  • It would be wrong to sell council assets.
  • Query over the amount of unpaid council tax and how it could be recovered.
  • How many quotes were obtained before the contract awarded to Newton Europe was made?
  • Why was there not a contingency plan for a financial emergency?
  • What is the situation with potential staff redundancies?
  • Will libraries or leisure facilities be included in the sale of assets?


In response to some of these, the following was advised:


  • A “Rights of Way” guide was being put together to assist Parish Councils with details on insurance, equipment required etc and would be delivered to all parishes very shortly.
  • The unpaid council tax has accumulated since 2002. It is the accumulated amount of the 4 district councils. Various reasons it has remained unpaid including no estate or no wills after a resident passes away.
  • The Newton Europe contract is a shared risk contract. There is rigorous scrutiny within the Council as well as internal and external auditors, so it has been closely scrutinised.
  • The Fair Cost of Care exercise revealed that Somerset Council were on a low fee structure compared to neighbouring counties so their councils were using care home beds in Somerset. The increase in care home costs, along with the cost-of-living crisis has all occurred together, meaning expenditure was running far ahead of income. There was contingency and some reserves, which can only be spent once.
  • Library services are statutory and so can not be sold or closed.
  • An asset of community value will only buy some time, it does not protect the asset forever.
  • A clear infographic regarding the finances and costs would be distributed to Parish and Town Councils.