Column: Understanding local council funding issues

You may have seen that the government has agreed to the standard council tax rise of 4.99 per cent for Somerset Council, and that is what will be proposed in the council’s budget at the executive and then to full council on March 4.

We submitted figures to the government of up to 5.9 per cent over the referendum cap in order to reach the government standardised figure of £2060 for a Band D home.

These were an illustration of what the impact of different council tax levels might mean up to that level.

Somerset Council tax – currently £1857 for a band D property – is lower than Wiltshire, lower than Dorset, lower than Devon, lower than Cornwall, and lower than the national average.

This difference is due almost entirely to a six-year freeze in council tax by Somerset County Council, in the face of rising demand and costs of services.

A bizarre and irresponsible decision which put local government in Somerset on the edge of viability.

Some in the media and in opposition have claimed that we asked for 11 per cent.

Quite rightly, many would have seen this as unacceptably high, and online petitions and fearmongering will have made people scared that this might happen.

This was a massive oversimplification of local government finance in which there are many moving parts.

Councils are given a provisional settlement in mid-December and then have a few weeks to take part in consultation and try to negotiate a better deal from the government.

Regrettably, the government removed from its grant calculations recognition that services (except adult social care) in a rural council cost much more to provide than in an urban one.

They also recalculated how much business rates we retain – and because Somerset’s economy has grown since the last re-set in 2013, that means we lost about £10m.

On the other hand, because we have areas of deprivation and poor social mobility, we have gained extra grant funding.

And most importantly, we have been successful with our lobbying (alongside other councils) for the cumulative Special Educational Needs and Disability High Needs Deficit to be 90 per cent written off.

That is a debt of over £100m pounds that we now know will never be on our balance sheet with associated costs of borrowing.

That welcome news from the government means that our borrowing costs will reduce, therefore pressure on council tax payers is reduced too.

Had the government made us take all of that debt out as borrowing, we would certainly have had to look seriously at the maximum of our indicative council tax rises.

So is this good news?

Yes – Somerset Council will not have a bigger council tax increase than most other areas.

And mo. There is still a significant budget gap that we will have to fill.

So far, we have been working hard to make the most of savings from moving to a unitary council: those savings now exceed £50m.

They include an annual saving of £5m on top salaries and £33m by reducing our staffing numbers by over 550.

By maximising the use of early retirement, voluntary redundancies, managing vacancies, and recruitment through using interim staff, we have minimised the loss of experienced staff and much higher compulsory redundancy costs.

But we can’t do that forever – that is why we are now investing in new IT equipment for our staff after a two-year freeze.

Bizarrely, what we cannot do is repurpose money that we have received from the government for other purposes to our own priorities.

Money from the Towns Deals, Levelling Up, and Future High Street funds, money for EV charging points, or active travel projects – these must be spent on these schemes.

You will often see people say, "Why can’t this be spent on filling potholes instead?"

The simple answer is we are just not allowed.

But we have more savings to make.

And we will do this by investing in transformation.

That means providing our services in different ways, using new technology, taking a preventative approach to ensure that we minimise the increase in demand for care services, making sure that the market for our suppliers is competitive so we get the best value for money, and making the best use of our data so that we can intervene early in all our services.

For every pound we spend, we expect at least £3 saved.

To come up with these proposals, we sometimes need to buy in new technology, ideas, and experience from other local authorities.

Sometimes we need to give our staff the time to work on these new ideas and need to hire temporary staff to fill the gaps.

This is why you will see clickbait headlines about consultants and temporary staff.

The last thing we want to do is to cut back on our frontline universal services in leisure, the environment, transport, and highways.

These are the services that our residents truly value.

When we declared a financial emergency, we said we would take the difficult and heartbreaking decisions to avoid bankruptcy, a section 114 notice.

This would mean highly paid commissioners (paid by council taxpayers) running the council.

Double-digit percentage council tax rises would be guaranteed.

Assets would be sold in a fire sale.

Services would be slashed.

None of us wishes to see that; we will continue to work hard to avoid it.