Somerset's new unitary authority will have to find around £44m in savings to balance the books in its first year of operation.

Somerset County Council and the four district councils – Mendip, Sedgemoor, Somerset West & Taunton and South Somerset – will officially cease to exist on April 1, 2023, being replaced by the unitary Somerset Council.

Following the local elections in May, work is progressing on the first budget for the new council as part of the transition process which will see all existing staff and budgets moved across to the new authority.

But pressures on existing services, past budget deficits and rampant inflation are all putting pressure on the new council's finances and the newly-elected Liberal Democrat administration.

The first budget of the new unitary authority was already expected to identify more than £28m of savings, as existing services such as planning and licensing from five councils are consolidated into one  – a process which will result in some job losses as duplication is removed.

However, initial assessments – made before a meeting of the council's executive committee in Taunton on Monday morning (July 11) – indicate that around £44.5m will have to be found in light of inflation and growing demand for services.

Each of the five existing councils is currently predicting a budget deficit by 2023/24 – with the county council being the highest at £14.2m, followed by Somerset West and Taunton (£5.2m), South Somerset (£4.5m), Sedgemoor (£2.8m) and Mendip (£1.9m).

Moreover, the county council is currently predicting an overspend of £14.4m in its final year, which has been blamed on inflationary pressures as well as growing demand for both children's services and adult social care.

Children's services alone is predicting an overspend of £12.8m – around 12 per cent of its budget – due to the "increased complexity and high cost of external placements" (i.e. children being placed into care outside of Somerset).

Councillor Liz Leyshon, portfolio holder for finance and resources, said these figures "need to be considered within the national context", arguing that circumstances had changed drastically since the previous budget was agreed in February.

She added: "Inflation is hitting every council in the country, and the increased cost of living, particularly energy costs, is affecting most people.

"In 2020, experienced officers in this council warned us that the districts would be hit first and hardest by the pandemic, as they lost income from parking and markets, but the sting in the tail of the pandemic would be felt in children's and adult's services, and the effects of lockdown on children and people of all ages would be long-lasting.

"We won't forget that this council went through its own financial crisis in 2017/18. That's improved the resilience and the position of reserves of this council, but we may well have used some of the savings that other councils still have ahead of them.

"Early action from the whole council is essential to get this budget back under control, because if we don't get this year into an achievable position, we cannot deal with the medium term."

The county council voted in September 2018 to approved £28m of cuts spread over a two-year period.

The Local Government Association (LGA) is predicting that local authorities across the UK face a £3.6bn budget gap by May 2024 in light of inflation and increasing demand for public services.

Ms Leyshon did not rule out a council tax increase in the new budget – but added that Somerset's historically low council tax levels mean that a rise would not generate a huge amount of revenue on its own.

She said: "As an illustration for the new council, a one per cent increase in council tax would bring in something in the region of £2.5m. In Surrey, a one per cent increase next year would bring in £8m – that gives you some idea of the challenge in Somerset."

The business case for the unitary predicted that shifting from five councils to one would save around £18.5m, based on savings which could be achieved by consolidating different departments.

Council leader Bill Revans said: "It's a somewhat sobering picture.

"We do need to keep tight control on spending as we go through this year, and we look forward to a more coherent approach from the government – when we have a government."

The full council will meet to further discuss the financial position at the Westlands complex in Yeovil on July 20 at 10am.