SOMERSET Council moved a step closer to bankruptcy on Monday evening (February 5) as its request to Government to be allowed to double the amount it can raise from council tax was rejected.
The council by law can increase bills for council tax by a maximum of 4.99 per cent, with two per cent ringfenced to be spent only on adult social care.
Any proposal for a larger increase would usually have to be put to a public referendum for residents to agree it.
But the council decided instead to go direct to Government and ask Communities Secretary Michael Gove to approve a 10 per cent council tax increase, something which other financially struggling authorities had already been allowed to do.
It would have raised an extra £17 million as the unitary council sought to close a £100 million budget shortfall and avoid issuing a ‘section 114’ notice, which is effectively a declaration of ‘bankruptcy’.
![Michael Gove, Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations](https://www.wellington-today.co.uk/tindle-static/image/2023/05/15/16/35151732471_49aae7bc4a_o.jpg?width=669&height=445&crop=669:445)
The council has also asked Mr Gove for a £20.8 million ‘capitalisation direction’ which would allow it to either borrow money or sell off property and other assets and use the income to cover day to day to revenue spending.
Other proposals for closing the budget gap were to take £37 million from its reserves and to make massive redundancies among its staff.
But the council heard late on Monday that Mr Gove had turned down its 10 per cent council tax request.
The news came two days before the authority’s executive meets on Wednesday to discuss more of the detail of the savings needed to keep the council afloat.
Mr Gove said he was still considering the ‘capitalisation direction’ request and would let the council know his decision later.
Council chief executive Duncan Sharkey told staff in an internal memo: “This means our councillors will need to set a balanced budget for 2024-25 without raising council tax by more than 4.99 per cent.”
Mr Sharkey said executive councillors would be given an update on the situation at their Wednesday meeting, where they would need to agree recommendations to be put to a full council budget-setting meeting on February 20.
Head of strategic finance Emily Collacott previously told councillors they would be forced to issue the ‘Section 114’ notice if the Government did not approve the two requests.
Somerset Cllr Andrew Govier told Wellington town councillors on Monday he believed the unitary council now might not be able to avoid issuing a ‘section 114’.
Cllr Govier said that would result in the Government sending in commissioners to run the council whose only interest would be the ‘bottom line’ of the accounts and stopping spending on anything that was not required by law.
He said the cost to Somerset of the commissioners could be £5 million a year, meaning the council would be spending a huge sum for people to tell it how to save money.