Experts identify 45 financial risks at Somerset Council

An independent report into Somerset Council's precarious financial position has identified 45 key risks – 32 of which have been given the highest risk rating.

They include council reserves falling below £30m and delays to the council's restructuring programme.

The report by the Chartered Institute of Public Finance and Accountancy (CIPFA) also acknowledged the ongoing pressure from years of frozen council taxes or low increases under predecessor councils.

The leader of Somerset Council, Bill Revans, said: "The report concurs with our own understanding of the considerable work that lies ahead and the importance of further transformation."

The report was commissioned by the government as a condition of the "exceptional financial support" it has given the authority.

This support includes giving the council permission to raise council tax by 7.49% in the upcoming financial year, and allowing it to sell off buildings to pay for day-to-day services.

In November 2023, the council declared a financial emergency, saying it was at risk of going effectively bankrupt unless more than £100m of savings could be found for the 2024/25 financial year.

The authority voted through a further £66m package of cuts and savings for its budget for 2025/26, including 555 staff job losses.

CIPFA outlined recommendations to counter the 45 risks it identified.

The public finance body said further "exceptional financial support" may be needed to balance Somerset Council's budget for 2026/27.

This support would be needed if the Liberal Democrat-led local authority proves "unable to deliver its financial goals" and savings through transformation and devolution of services to town and parish councils, the accountants said.

The report called for "rapid mobilisation and a need to increase the pace and co-ordination of the actions that are needed to achieve this".

But it also praised the council's "well conceived" and "well led" transformation programme, adding that it "deserves to succeed".

However, it pointed out that the programme has led to "poor morale" within the council's workforce and warns that "further steps" are needed to ensure the remaining staff are properly supported.

A CIPFA spokesperson said: "The management of debt generally, which is highly distributed across the council, needs a more coordinated approach and should be more closely monitored.

"Governance in the council generally is satisfactory but capable of improvement in some areas.

"The adult social care service is being led and managed insightfully, has received significant additional resources, and confronts national rather than local challenges, which are being approached with pragmatic good sense.

"Children's services remains on its improvement journey."

Concern was also raised in the report about the reduction of the council's available reserves.

Most damningly for the Conservatives, which controlled the county council between 2009 and 2022, the report concludes that "a significant proportion" of the current council's budgetary woes has been caused by the freezing of council tax for six consecutive years from 2010.

This "led to funding shortfalls in each future year in perpetuity", the report said.

The freezes and low council tax rises were described as "poor decision making".

Liberal Democrat-led Somerset Council was formed in April 2023, replacing Somerset County Council and the four district councils of Mendip, Sedgemoor, Somerset West and Taunton, and South Somerset.

The reorganisation was based around the One Somerset business case, put forward by Conservative former county council leader David Fothergill and approved by Boris Johnson's government in July 2021.

The CIPFA report said it "appears likely that the business case" for creating one authority for Somerset "may have underestimated" how long it would take for the promised financial saving to materialise.

Of the originally promised savings of £18.5m, £8.8m has been achieved to date, with the remainder on track to be achieved by the end by April 2026, as part of the council's transformation programme.

Mr Fothergill, still a Conservative councillor but now part of the opposition, said the criticisms of the previous council were unfair.

He said: "For six years, in the last 10 years, we have not required that additional council tax take.

"It is a complete fallacy to say that is the root of the problem.

"The root of the problem is the lack of transformation [at the current council] and the lack of transition."

He said that when he was in charge, he managed to set balanced budgets for six years, while keeping council tax low or frozen.

Mr Fothergill continued: "It's a fallacy to think that council tax should be increased just to increase reserves, when actually we were going through a period of severe austerity and people needed to have relief on their day-to-day expenses."

He also disputed the assertion that the timescales for delivering the savings of having one council for Somerset were under-estimated.

The councillor said the Lib Dems did not work fast enough when they took control.

Mr Revans, the Lib Dem leader of Somerset Council, told BBC Somerset: "We are committed to transparency and so welcome this very detailed report that recognises the significant effort being made to move the council towards sustainability at a time of huge financial pressure across local government."

He said the council also "welcomes an acknowledgment of the savings made so far" and of the progress towards sustainable spending for adult social services and children's services.

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