Local authority facing bankruptcy within next two years
Somerset Council could go bankrupt within the next two years – according to reports.
The local authority could be forced to issue a bankruptcy notice within two years despite taking in record amounts of revenues.
The authority is struggling with large amounts of debt and this year increased council tax bills by five per cent – the largest amount allowed under the current rules.
New papers have describe the council’s financial position as “stark and challenging” and reveal a projected budget overspend of £26.1m for this financial year.
The local authority is also facing a “budget gap of around £100m” over the next three years.
Deputy leader of the council Liz Leyshon said repeatedly using the council’s reserves was no longer an option.
She added that the local authority is set to cut some local services “to a statutory level and no more”
The Liberal Democrat councillor added: “The national problems we warned about last year have not improved, if anything they are worse.
“The demand on social care continues to grow and inflation and interest rates have continued to rise. We now have a clear picture of the financial legacies of the five predecessor councils, although there is much work still to be completed by the external auditors.
“The current and next two years will be particularly challenging until the benefits of transformation of services at the new council can be realised.
“After a decade of neglect, the government has to address the future of council funding and how pressures, particularly on councils with social care responsibilities, are pushing many well-run councils towards to a Section 114 notice.
“Having already taken savings from the move from five councils to one council, we now have a transformation programme that will start to produce saving in two to three years. We are working well with the local NHS on integrating our care services.”
She added: “Somerset looks poised to become Britain’s green energy powerhouse with Hinkley Point C coming on stream and the proposed new gigafactory, but the next two years will be very, very difficult. The council’s challenge will be to make sure we are in a the right place to make the most of these opportunities, while taking care of those most in need.
“We know that we will have to reduce some of our services to a statutory level and no more, yet we know that when residents pay their council tax, they rightly expect their council to support such services as sport and leisure, arts, parks, and open spaces. We also need to maximise opportunities in economic development and look after our town centres.
“We will review our whole capital programme to ensure that we create a Somerset Council that is sustainable in the longer term. This is a difficult task but one that we are committed to for the people of Somerset.”