SOMERSET County Council will finish this financial year with an underspend of just under £1M, according to the latest projections.

In November the council forecast an overspend of £2.4M for the 2018/19 financial year – even after the £15M worth of spending cuts which were agreed in September.

The council has now been able to achieve an underspend of £921,000 by reducing the amount of money it needs readily available to pay back long-term debts – known as the minimum revenue provision (MRP).

Council leader David Fothergill praised the progress made, but acknowledged that deeper issues surrounding the funding of local government remained unsolved.

Councillor Mandy Chilcott told the cabinet in Taunton on Wednesday morning (January 23) this was the first time in two financial years that an underspend had been predicted by the council.

She put this down to the authority having “a tight grip” on spending and delivering around 95 per cent of all the savings which were agreed across both its February 2018 budget and the September cuts.

She added: “This is a boost to the council after the sustained negative attention we have attracted recently.

“I know there have been impacts on our staff and our services, and I regret that, but I do believe this council will be stronger after this turnaround.”

Peter Lewis, the council’s interim director of finance, explained in his written report that “new and more flexible regulations” surrounding the MRP meant the council had been able to remove its projected overspend.

He said: “The MRP is a provision made in the accounts for the repayment of long-term debt when it becomes due.

“The revised calculation has reduced the budget required for MRP by £4.178M.”

He subsequently added: “We are now on a trajectory to present to the cabinet and council a balanced budget for 2019/20.”

Mr Lewis, who was appointed on a temporary basis after the resignation of Kevin Nacey in April 2018, will be leaving the council after the budget has been agreed at the end of February.

Responding to a question by Councillor Liz Leyshon about the council’s long-term financial position, he said the authority still faced challenges in the years ahead in spite of the progress it had achieved to date.

He said: “I think the impact of not having a financially resilient position doesn’t change. The likelihood of not being able to set a robust budget is reducing.

“We are still in uncertain times. There are still financial pressures upon the organisation, there are challenges in the demography of the county, and we are facing a government spending review.”

Council leader David Fothergill said he would continue to push the government to look again at fairer funding for local authorities.

He said: “We had to take some difficult decisions, and there has been a lot of work done by a lot of people. The impact of our decision on individuals, we must always bear in mind.

“That said, we are in a very different place. In the summer we were in the papers all the time, and there were a lot of wild statements about us going bust by people who should have known better.

“The long-term sustainable financial model [for local government] still isn’t there. We’ve got to keep the pressure on the government – we can say: ‘We’ve played our part, now government, you have to pay your part.”