Urgent action needed over council's 'fragile' finances

Urgent action is needed as a final notice has been issued to a council to improve its finances, the government has warned.

The Best Value Notice from the Ministry of Housing, Communities and Local Government (MHCLG) said Somerset Council is in a "fragile financial position" and needs to take "urgent action".

The council said while the notice is a "serious development" it was expected, and much of the work required has already started.

Council chiefs will have to report back to the government every three months for at least one year on their improvements.

According to the notice, there is evidence of:

• "Weaknesses in financial resilience and financial management, including continued reliance on Exceptional Financial Support, low reserves, the need to address statutory recommendations issued by the external auditor"
• "Instability in leadership of the authority's finances".

Council leaders said that rising demand has put pressures on key areas, including children's services, adult social care and special educational needs and disability spending.

The notice comes three years after Somerset Council declared it was in a "financial emergency", and earlier this year the BBC reported the council would lose millions on property sales as it tried to balance the books.

The notice includes seven actions the council needs to take, including regular written updates to the government.

Several other local authorities have Best Value Notices: Cheshire East Council, London Borough of Newham, London Borough of Hillingdon, Shropshire Council, Basildon Borough Council and Tees Valley Combined Authority.

A Somerset Council spokesperson said the authority is facing rising demand and costs in essential services... "alongside a local government funding system which does not adequately reflect the cost of delivering services in a large rural county".

They added: "The council continues to argue that relying on council tax increases to fund demand-led services is not sustainable.

"At the same time, the council accepts that it must continue to improve financial management, governance, transformation and performance across key services.

"Many of the actions government would expect to see are already under way."

Council leader Bill Revans said councillors recognise the seriousness of today's announcement and we accept the need to demonstrate continued improvement.

"We also want to give every assurance that the work needed is already under way and we are on the front foot.

"Residents should be reassured that Somerset Council remains responsible for making decisions locally.

"Essential services will continue to be delivered and our commitment to improving services and achieving financial sustainability remains unchanged," he added.

Councillor Diogo Rodrigues, leader of the opposition Conservative group, said it was a "damning" verdict on the Liberal Democrat administration.

He said: "This must be a turning point.

"The Liberal Democrat administration needs to stop making excuses, accept responsibility for where the council finds itself, and work with all councillors to restore sound financial management."

Councillor Leigh Redman, Labour group leader at the Somerset Council, described the warning as serious.

"One that should be treated as an opportunity to demonstrate how we will continue strengthening the organisation and improving outcomes for our residents," he added.

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