Somerset’s new unitary authority will have to find £42m in savings next year to balance its budget.

Somerset Council was created on April 1, with Somerset County Council and the four district councils all being abolished, with their assets and finances all moving across automatically.

The council set its first budget in February 2023, balancing its books through the maximum possible council tax rise and committing to delivering savings over the following 12 months.

It has now emerged that the council will have to find an even larger amount of savings for its 2024/25 budget – with a budget gap which could balloon dramatically as demand for services grow.

The council’s medium-term financial plan (MTFP) predicts how much money will be needed to balance the books (including repayments on any external borrowing) over a three-year period (i.e. until April 2026).

The current MTFP predicts that, unless savings are identified, the council faces a revenue budget gap of £42m in 2023/24 – a gap which could grow to nearly £99m by 2025/26 if nothing is done.

The council’s earliest predictions, made shortly after the budget was set, expected the gap in 2023/24 to be around £40m before savings.

However this is now forecast to be higher in light of persistently high inflation, rising interest rates and increasing demand for both children’s services and adult social care (which form the bulk of the council’s day-to-day spending).

This does not include an expected in-year budget gap of around £20m, which unless demand slows will have to be plugged by the council’s existing reserves.

Cllr Liz Leyshon, the council’s portfolio holder for resources and performance, told the council’s executive committee on Monday morning (July 10) that the council’s financial issues reflected a wider national problem regarding local government.

She said: “This may not be what we would want to be reading at this moment, but we are where we are, nationally as well as locally.

“We are now working with one team, whereas this time last year of course we were working across five teams.

“There is going to be a great deal of work going on – it is not going to be easy, and there is no one answer to our problems.”

To address the expected budget gap, the council is carrying out an early review of its finances, with 17 different prongs of attack to bring costs and spending town.

The 17 areas where potential savings can be found are: Adult’s services, Children’s services, the schools high needs block, school transport review, school capital projects, school budget reviews, staffing controls, commercial investments, asset review, council tax and business rates review, capital programme review, reserves review, capital receipts, treasury management, review of grant schemes, streamlining the delivery of front-line services, financial sustainability review.

Cllr Mike Rigby, portfolio holder for transport and digital, said there was “a systemic and existential threat to local government” which could only be avoided by a fundamental change in central government policy.

Cllr Ros Wyke, portfolio holder for economic development, planning and assets, agreed: “This is a government which has systematically reduced the powers and funding of local government. Local government is on its knees – it’s not allowed to do very much and what is does is often just statutory in light of the funding cuts. We should be very honest with the public about that.”

Cllr David Fothergill said a solution could not be found by constantly blaming Whitehall. He said: “I can understand why we’d want to blame the government. But as someone who has led a council through a potential Section 114 situation [effective bankruptcy], you have to get over blaming other people and get a grip on your finances.”