Unitary council to consider asking DLUHC permission to raise tax by 10% without referendum
Councillors at Somerset Council could be set to ask the Department for Levelling Up, Housing and Communities (DLUHC) for permission to raise council tax by more than the 5% threshold without holding a referendum, in order to stave off having to issue a section 114 notice.
The request for dispensation to raise council tax is part of a raft of measures recommended to councillors that aim to close a £108m funding gap for the coming financial year.
According to a budget update report authored by Somerset's Head of Strategic Finance, Emilly Collacott, the council can reduce the gap to £37.9m by making savings, using reserves and dipping into a fund.
Collacott recommended that the council seek dispensation from the Government to increase council tax by 9.99% – which would bring in an extra £17m per year – and request a £20m capitalisation direction to tackle the remaining £37m gap.
Alternatively, her report recommended the council request a capitalisation direction for the full £37m if councillors do not vote to seek the council tax raise.
The report warned that the council's section 151 officer would be forced to issue a section 114 notice if neither recommendation is implemented.
According to Collacott's report, the council is operating "as if a section 114 had been issued", with monthly reporting of the budget monitoring position to Scrutiny and the Executive alongside other measures.
Councillors are set to vote on the report at an executive council meeting on 15 January.
Commenting on the plans, Council Leader, Cllr Bill Revans, said the funding model of local government "is broken and our pleas for assistance have not yet been answered".
He added: "Councils up and down the country are in a similar position and in Somerset we have been hit extra hard by cost inflation in care.
"This is what a financial emergency looks like. No decisions have been made, but all of these savings and the 10% Council Tax increase are unprecedented actions that have to be considered if we are to steer this authority through a period of extreme pressure."
Cllr Revans said: "Officers have done as we asked and left no stone unturned. The result is a set of options, many of which are very unpalatable – some heart-breaking – that no-one would want to take forward.
"Our Council Tax is one of the lowest among the unitary councils which have responsibility for care and we find ourselves having to consider putting it up by 10%. That equates to an extra £3.15 per week for the average household to limit the impact on core services, many of which support the most vulnerable."
The Autumn Statement 2022 set out new referendum limits for local authorities, allowing councils to raise council tax by up to 3% without a referendum.
Councils responsible for social care can raise an additional 2% adult social care precept.
The Government has previously allowed Thurrock, Slough and Croydon to raise council taxes above the threshold without referendums, but all had issued section 114 notices beforehand.
Woking Borough Council, which issued a section 114 notice in June last year, has also been told to raise its council tax rate above the referendum threshold in a letter from Local Government Minister Simon Hoare last month (18 December).
Adam Carey
