THE Government has stepped in to bail out Somerset Council for a second successive year to allow it to avoid bankruptcy.

Councillors will meet in Bridgwater on Wednesday (March 5) to agree their 2025-26 budget and were facing an unsurmountable £43 million gap.

It meant the unitary authority faced issuing a Section 114 notice, effectively a bankruptcy declaration which would trigger Government commissioners to move in to County Hall and take over.

But now the Government has agreed in principle to a £63 million second ‘capitalisation direction’ to allow the council to sell off assets and use the money to cover day to day expenses instead of having to again raid reserves.

Of that sum, £20 million was rolled over from last year’s directive to help meet ‘transformation and redundancy’ costs as the council saves money by axing up to 1,200 jobs, or a quarter of its workforce.

The Government had earlier given consent to the council’s request for a larger than permitted rise in council tax bills this year - 7.49 per cent instead of 4.99 per cent – which will bring in an extra £9.1 million.

Liberal Democrat council leader Cllr Bill Revans said: “We know this is unwelcome, but council tax rates in Somerset will remain below the national average, and below many of our neighbours.

“We will continue to do everything we can to move towards financial sustainability, including exploring all areas to further reduce costs and find savings.

“We will also continue to lobby Government for a fairer system to provide essential services looking after the most vulnerable adults and children in our communities.

“The Government has promised to reform the broken system of funding for local councils like Somerset who are struggling with rising demand and costs for core services like social care.

“Unfortunately, this will take time that we simply do not have.”

Finance officer Maria Christofi said in a report to councillors the budget had been prepared with an assumption that the Government’s ‘in principle’ decision became a final decision.

Ms Christofi said the alternative would leave no choice but to issue a Section 114 notice which ‘has severe consequences for a council’s ability to continue to deliver valued non-statutory and statutory services to the public’.

She said the ‘capitalisation direction’ provided only a temporary solution to the council’s budget problems this year.

Ms Christofi said another £101.284 million budget deficit was already forecast for 2026-27 and it was unlikely that any further savings plan would be capable of meeting it.

She said: “It is highly probable it will require further Government support in 2026-27 and possibly beyond in order to support the transition to new and more cost effective ways of working.”

The new budget if approved by councillors on Wednesday will see the average band D property owner pay an extra £129 for the year, equivalent to £2.49 a week, before adding charges for the police force, fire and rescue service, and parish and town council precepts.