Council could hike tax by 7.5% to avoid bankruptcy

Council tax bills in Somerset could rise by 7.5% in a bid to prevent the local authority from going bankrupt.

Somerset Council has been granted special permission by the government to increase the amount residents in the county pay – above the national cap of 5%.

The authority had been seeking Exceptional Financial Support from Government as part of its budget setting for 2025/26.

Since its creation in April 2023, the council says it has been taking emergency action to reduce costs and plans to save a further £47m next year, including £34m by reducing the number of staff and managers employed by April 2025.

However, its says cost pressures in Children’s and Adults Social Care continue to soar nationally and Somerset Council is facing a gap of around £66m for 2025/26.

Leader Bill Revans wrote to Angela Rayner MP, Secretary of State for Housing, Communities and Local Government (MHCLG), to highlight the challenge and request Exceptional Financial Support.

MHCLG has now confirmed Somerset Council will be allowed to raise Council Tax by up to 7.5%, an amount 2.5% above the national cap of 5%.

The council will now meet to decide whether to agree to the increase.

Cllr Revans said: “Today’s announcement gives us clarity and we will need to consider the implications before we finalise our budget proposals for debate and decision at Full Council later this month.”