Somerset Council is "breathing slightly easier" over its financial position after managing to balance its books for the last financial year.

The council declared a financial emergency in November 2023, and only managed to pass a balanced budget in February by committing to the maximum possible rise in council tax, the sale of around £20m of non-operational assets and implementing savings of around £35m.

Since the budget was approved, the council has been working hard to stave off the threat of effective bankruptcy (also known as a Section 114 notice) – including a rigorous transformation programme (which is leading to staff redundancies), identifying buildings which can be sold off and reviewing its borrowing levels.

The council has now confirmed that it managed to balance its books for the last financial year, and even achieved a slight underspend in the process.

It is also forecasting a smaller underspend for the current year – though great uncertainty remains going forward.

The council's financial position was discussed at length when its executive committee met in Taunton on Monday morning (September 2).

In the 2023/24 financial year, the council achieved an underspend of around £1.8m, or around 0.3 per cent of its total annual revenue budget.

This sum has been added to its general reserves, meaning it can be used in the coming months and years should costs in other areas rise.

Deputy leader Liz Leyshon said: "This has made breathing slightly easier for a while this summer – but not for long."

In the current 2024/25 financial year, the council is currently forecasting an underspend of £200,000, based on the spending figures for the first three months of the financial year (i.e. April to June).

Spending on some areas of the council has been brought under greater control, with savings being made on adult services through extensive commissioning work, which has brought down the fees associated with both residential placements and weekly nursing visits.

However, spending on other areas is still higher than forecast – particularly in children's services (due mainly to the cost of care placements outside of Somerset) and waste services (caused by the additional payments being made to Suez to protect the existing contract).

Ms Leyshon said: "There is a great deal here to commend. The work of our finance team is continuing at pace."

Chief executive Duncan Sharkey added: "This has given us a lot more stability in terms of what we can do.

"We are still in difficulty, in that we are still spending more than we raise, technically. But we've got a lot more things in the action plan which will hopefully deal with that."

Within the capital budget (which includes new roads, schools and major regeneration projects), around £74m of spending is subject to "slippage" – meaning it will be spent in the next financial year or later, rather than before April 2025.

Much of the slippage has been caused by the unavailability of contractors, clashes with other schemes or the "re-profiling of legacy projects" from the former district councils, where projects have been reassessed in light of high inflation within the construction industry.

This slippage affects elements of the town deals in both Bridgwater and Glastonbury, the improvements to Bridgwater's 'northern corridor' (funded by the levelling up fund) and the upgrades to the Chelston link road in Wellington (also known as the 'concrete carriageway').

Councillor Mandy Chilcott, the Conservative shadow portfolio holder for resources and performance, said: "This says to me that we have not delivered on the projects which we hoping to deliver on.

"There have been delays for the people of Somerset, and there is a cost of borrowing.

"That money could have been spent on other projects in the county, and we know how tight our budgets are.

"This doesn't show any signs of improvement for me – this has been an ongoing issue for the council."

Maria Christofi, the council's interim chief financial officer, responded: "The ambitions of the people delivering the capital programme sometimes gets ahead of itself, and we will be reviewing that across the board.

"The benefit of not spending borrowing has come through into the revenue budget."

Council leader Bill Revans has reiterated his call on the new Labour government to address how local government was funded, arguing that the ongoing financial issues would persist without much-needed reforms to council tax and business rates.

He said: "There has been hard work that has gone on to get us to this position.

"It doesn't take away from still being in financial difficulty, like many other councils are in the country.

"We look forward to the fixing of the broken model of local government and in particular adult social care, which is the root cause of the position in which we've found ourselves."