Somerset Council express bankruptcy fears due to difficulties funding social care

Somerset Council is warning it could declare bankruptcy within two years amidst concern at its current level of spending.

Ahead of a meeting of the Council's executive next Tuesday (6 September), a paper published by the Council has described its financial position as "stark and challenging."

The Council say they are particularly concerned at unsustainable levels of spending on adult and children's social care, warning they are being projected to spend £21m of reserves on it this financial year to cover increased demand and complexity.

It would be the second year running such an overspend has occurred.

The Council say they are also concerned by the increased costs of processing household waste, as well as refinancing the loans of its five predecessor Councils.

Somerset Council's Deputy leader and Lead Member for Resources and Performance, Councillor Liz Leyshon, says the continued use of reserves to fund day-to-day services "cannot continue without putting the financial viability of the Council at risk."

“The national problems we warned about last year have not improved, if anything they are worse," Cllr Leyshon stated, saying "the demand on social care continues to grow and inflation and interest rates have continued to rise. "

She added that the Council now has "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."

Cllr Leyshon also warned that the Council "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."

She added that the Council will review its capital programme to ensure Somerset Council remains sustainable long-term.

Cllr Leyshon also called on the government 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."

She said “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."

A Government spokesperson said: "Councils are ultimately responsible for the management of their own finances.

"However, the Government has been clear that local authorities should not take excessive risk with taxpayers' money, and we have established the Office for Local Government to improve the accountability for performance across the sector."

They added that the government "recognises all councils are facing pressures and, as well as making it a priority to halve inflation, we have introduced a one-off funding guarantee to ensure that every council sees at least a 3% increase in core spending power before any local decisions on council tax rates.

"We are also providing around £2 billion in additional grants for social care."