Somerset Council's financial situation has reached a critical point, prompting Councillor Bill Revans, the Leader of Somerset Council, to send an open letter to all residents in the county.

In the letter, Revans discloses a daunting financial reality: "Somerset Council has a projected overspend of more than £27million in the current year, and a budget gap of £100million for next year."

The financial strain, as Revans describes, is "largely due to increasing costs of the social care services we must provide for our most vulnerable adults and children."

The council faces a challenging predicament where the income from Council Tax is insufficient to cover escalating expenditures, leading to a widening fiscal deficit each year.

Revans warns of the severe consequences of failing to propose a balanced budget, stating, "If we are unable to propose a balanced budget for the next year, we would have to declare a Section 114 notice." This scenario, equated to council bankruptcy, would result in intervention by external commissioners. These commissioners would be tasked with stabilising the council's finances, potentially through drastic measures like asset sales, service cuts, and increased Council Tax.

Highlighting the broader context, Revans points out the nationwide challenges affecting local governments, including the aftermath of the COVID-19 pandemic, Brexit-related recruitment issues, and inflation. These factors, combined with specific local issues such as the delayed 'Fair Cost of Care' exercise and the previous administration's decision to freeze council tax, have exacerbated Somerset's financial woes.

In his plea to residents, Revans underscores the urgency of the situation: "The national model for funding social care is broken and we urgently need your support to ensure we can continue to care for those most in need." He urges residents to assist by reaching out to their Members of Parliament, advocating for Somerset Council in this time of crisis.

The full text of the letter is below:

OPEN LETTER TO SOMERSET RESIDENTS FROM THE LEADER OF SOMERSET COUNCIL

Dear Somerset Resident,

You may have seen in the news that Somerset Council has declared a Financial Emergency. As Leader of the Council, I am writing to give you more information and to ask you to help us present Somerset's case to the Government by writing to your Member of Parliament.

Somerset Council has a projected overspend of more than £27 million in the current year, and a budget gap of £100 million for next year. These are largely due to increasing costs of the social care services we must provide for our most vulnerable adults and children. Income from Council Tax is limited, and the difference between income and expenditure is growing each year.

If we are unable to propose a balanced budget for the next year, we would have to declare a Section 114 notice. That is effectively bankruptcy for a Council. This would mean that unelected, highly paid commissioners would come in to stabilise the council's finances, selling off whatever they could, cutting all services except for those we legally have to provide, and raising your council tax. And Somerset Council tax payers would have no choice but to pay them.

We are determined that these decisions should instead be made by locally elected Councillors who know and love Somerset. That is why we will make the tough decisions needed to stabilise the finances of the new unitary Somerset Council, in order to avoid a Section 114 notice.

As Liberal Democrats, we believe in transparency, openness, and honesty. We are aware of many other councils across the country and across the political spectrum in similar positions. This year 1 in 10 councils like Somerset are in a similar financial position to us. Six out of ten are forecasting that they will be in this position by 2025.

We have taken the decision to go public on our position here in Somerset so that you know the situation. We are working with the officers at Somerset Council to move further and faster in our actions to address the budget gap.

Liberal Democrats opposed the Government's decision to impose one unitary council on Somerset. We have inherited that business case, and are making good progress on the savings identified. However, those savings will be nowhere near sufficient to deal with the forecast £100 million deficit, so we will need to find considerable savings this year, and in the years to come.

So, how did we get here?

Local Government all over the country has faced the following challenges over the past few years, and all have impacted our financial position in Somerset:

• The Covid-19 pandemic, the vaccination programme, and the end of Government's Covid grants masked issues with care providers' costs and our fee structure for adult social care placements.
• Nationwide recruitment issues that were made worse by Brexit, particularly in the care sector.
• The commencement and postponement of the "Fair Cost of Care" exercise, which opened the book on fees charged for care and nursing homes across the whole country, exposing the previous low fee structure in Somerset.
• The invasion of Ukraine, causing so many people to leave their homes for other countries, and huge impact on energy costs.
• Inflation moving to double figures.
• The short and disastrous period of the September 2022 Truss budget which led to soaring interest rates after historic low rates from 2010 to 2022.
• Increased costs of placements and transport in children's services and education.
• Increases in homelessness and consequent costs to the council caused by increasing rents and mortgages.

These have all changed the financial landscape of this country, especially Somerset.

This position in Somerset is especially difficult because we have both a low rate of Council Tax and a low Council Tax base compared with other similar Councils across rural areas of the country. The previous Conservative administration of Somerset County Council took the ideological position to freeze council tax for six years between 2010 and 2016. This has stripped more than £200 million pounds from the council budget since, and continues to have an effect every year. This is a hugely detrimental factor in Somerset's situation.

These challenges make this an especially tough time to create a viable new Somerset Council. However, we are confident that we have the team and the plan to respond to this emergency. Please be assured that we are:

• Managing our finances prudently and responsibly.
• Streamlining public services in Somerset by implementing the one Unitary Council for Somerset and delivering significant savings and efficiency measures in line with the Government approved business case for Somerset Council.
• Developing partnerships to reduce spending, working closely with Somerset NHS to collaborate on making the health and social care systems work together better.
• Working with our City, Town and Parish Councils to devolve services and assets.
• Working with our voluntary sector to improve the prevention agenda and community response, so that people lead fulfilling and healthier lives in their own homes for longer.
• Selling assets and reviewing all areas of spending.

However, all this will not be enough to close the gap between our income and our spending on demand-led services.

Our overspend position is not because of poor control or oversight, nor policy decisions or legal action –it is simply an exceptionally large increase in our costs for demand-led services, set against our constrained ability to raise additional income.

The national model for funding social care is broken and we urgently need your support to ensure we can continue to care for those most in need. This is not a new debate. Somerset County Council –under the previous administration -sounded the alarm back in 2018.

We were not the first to do this but, thanks to Somerset's bold work with the BBC Panorama team, we sounded it the loudest on behalf of all local authorities and everyone receiving social care.

The Government has failed to heed these warnings from many different sources about the fundamentally broken system of funding that cannot keep pace with the spiralling costs of care. Thousands of people signed a petition calling for all political parties to work together to find a solution.

The time for talking has passed and we now need an urgent solution.To illustrate the reality of our situation, in 2022 a typical placement in a care home was costing Somerset council £575 a week. The same placement now costs us £900. If you multiply that by 52 weeks and by the increasing numbers of our most vulnerable residents that need our care, the scale of the problem is clear.

At the same time we can only increase Council Tax by single figure percentages. Please know that we understand that ANY increase maybe too much for those on limited budgets and that is why we introduced a new Council Tax Reduction Scheme, and an Exceptional Hardship Scheme. Government funding for Councils has reduced so much over the 14 years of austerity, and costs have increased so much that we now find ourselves with a structural deficit and a financial emergency.

I have written to Michael Gove, the Conservative Secretary of State for the Department of Levelling Up, Housing and Communities, to ask him to:

•Take urgent and meaningful steps to ensure that the issue of adult social care funding is addressed as part of the forthcoming Autumn Statement and Local Government Finance Settlement;

•Provide us with the freedom and flexibility for us to do all we can to address this matter locally; and

•Set out a clear plan which will deliver a better and more sustainable solution for the future of local government finance.

I have copied the letter to our five Somerset Members of Parliament and I would ask for their support for Somerset Council, our residents and the services we provide as a Council. Please can you support us by writing to your Member of Parliament asking them to support your Somerset Council as we plan to survive this financial emergency?

Your voice is essential in ensuring the Government understands the scale of this challenge and the potential impact of Somerset's financial emergency.

Thank you, and take care.