Somerset taxpayers will see their council tax rise by the highest amount possible in the first year of their new council.

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

The new unitary authority will set its very first budget on February 22, needing to plug a budget gap of more than £38m in light of increased demand for children's services and adult social care.

To achieve this, council tax bills across Somerset will rise by nearly five per cent – and numerous savings will be implemented over the course of the year.

Here's everything you need to know:

What budget is being set on February 22?

Every local authority in England sets two different budgets – its capital budget (which covers the creation of new buildings, roads and other facilities) and its revenue budget (which covers day-to-day spending on services, including rent and salaries).

The capital budget or programme is usually funded by a mixture of borrowing, central government grants, contributions from housing developers and the sale of existing assets (e.g. land or buildings which are no longer used).

In Somerset's case, more than £258m will be spent on capital projects in the next 12 months – ranging from a revamp of the Octagon Theatre to protecting Minehead homes from cliff subsidence.

The revenue budget, by contrast, is largely funded through council tax and central government grants – the latter of which has been steadily declining since 2010.

Councils have got around this by investing money in commercial properties, using the rent generates to fund front-line services.

In short, you cannot fund day-to-day spending by borrowing money from other people – it has to mainly come out of ordinary people's pockets.

In Somerset, the unitary authority will have a revenue budget in its first year of £493,357,150.

By how much can my council tax go up?

Until recently, the highest increase in council tax which could be implemented in a council's annual budget was 2.99 per cent – comprising 1.99 per cent for general revenue and one per cent ring-fenced for adult social care.

If a council wished to raise council tax by a higher amount, it would have needed to hold a referendum, with the public getting to vote directly on the increase.

Levelling up secretary Michael Gove MP announced in 2022 that this maximum amount (the 'referendum ceiling', if you like) would be increased to 4.99 per cent – with 2.99 per cent for general spending and two per cent ring-fenced for adult social care.

A limited number of councils have been granted permission for higher tax rises without a referendum – such as Croydon and Slough, both of which have served Section 114 notices (essentially declaring themselves bankrupt).

Somerset came close to being in Section 114 territory during the 2017/18 financial year, where £28m of cuts were voted through – but a lot has changed since then.

What will my council tax bill be?

Council tax is calculated based upon the value of your property, using bands which were set in the early-1990s as a replacement for the widely unpopular poll tax (also known as community charge).

For the average Somerset taxpayer (known as Band D), their council tax bill will rise to £1,646.04 per year – or £135.95 per month.

This comprises £1,434.93 of general council tax (a rise of £46.88), £196.46 for adult social care (a rise of £31.36), and £14.65 to fund the Somerset Rivers Authority.

While this seems high, it is still far below the rate of inflation.

Is the rise in council tax going to be enough to fund my local services?

No – merely raising council tax will not be enough.

On top of the council tax rise, more than £38m of savings are being implemented, designed to streamline Somerset's public services and make them cheaper to run in the years ahead.

Numerous savings involve removing duplication as the functions of the five existing councils merge into one new authority.

These include a reduction in the number of senior managers (£2.9m), lower pension costs as a result (£7m) and standardising IT and mobile phones (at least £595,000).

A further £564,000 will be saved purely by the total number of councillors across Somerset going from 320 to 110 overnight, with fewer people claiming allowances or travel expenses.

In total, around £15.7m of the necessary savings come from administrative reorganisation, with contracts being consolidated to reduce running costs – in other words, changes which should not impact on the running of front-line services.

A further £3,076,000 is being saved following the full implementation of the Recycle More programme, with the new kerbside collections being more cost-effective than the previous regime.

However, some duties of the existing councils will not be taken forward in-house, will be reduced or will be delivered in a way which is more cost-efficient.

Up to £5m will be saved by streamlining adult services through "process improvements", with full details expected to be published by the budget meeting on February 22.

A further £3.5m will be sources from consolidating the numerous disabled facilities grant services within the existing councils, making it easier and cheaper for people to get improvements which allow them to stay in their own homes for longer.

In children's services, £1,269,000 will be saved through improved family safeguarding, with early intervention by officers and social workers reducing the need for children to be taken into care.

Up to £820,000 will also be generated through moving children from external care placements to new children's homes in Somerset, run by the Shaw Trust.

Up to £669,000 a year will be saved as part of South Somerset District Council's contract with Freedom Leisure, which operates leisure centres in Chard, Wincanton and Yeovil – with this sum not having to be paid to the operator from April 2023 onwards for the lifetime of the contract.

A further £130,000 will be generated by renting out more spaces within the Gateway park and ride site in Taunton to "external organisations" – such as EDF Energy, which allows them to transport staff between Taunton and the Hinkley Point C construction site.

The council hopes that a further £60,000 of extra income can be generated by more people using the park and ride sites, building on the new cheaper fares and Taunton fare zone which has been implemented recently.

South Somerset's pest control service operated in-house will be abolished, saving £46,000, while a further £20,000 will be saved by reducing the number of annual dredges at Watchet Harbour.

An additional £10,000 a year will be generated by increasing the parking fees at Berrow and Brean Beach by 50p per vehicle, while £11,000 will be saved by not providing paper copies of national newspapers at public libraries.

Is there any good news?

The council's prospective administrators say that by focusing the cuts on administration and back-room areas, the council has been able to protect front-line services and commit more money where it is needed.

Adults' services will see an additional £28m of funding in 2023/24 compared to the previous year, while children's services will get an extra £18.8m.

There will also be no cuts to the grants provided to voluntary sector organisations which rely on council support – including Citizens' Advice.

A further £300,000 has been allocated for the new local community networks (LCNs), which will bring together councillors and local organisations to create plans of how communities will change in the years to come.

Jason Vaughan, the council's director of finance and governance, told the council's executive committee in Taunton on Monday morning (February 13) this additional funding was impressive given the financial pressures being felt across the UK's public services.

He said in his written report: "This has been achieved despite the budget being impacted by financial challenges facing all councils.

Somerset Council is no different, with costs increasing more than the income that is received, the impact of inflation and demand continues to impact on adult's and children's services.

"We have set out a balanced budget, but it will require members to make some difficult choices.

"Like a lot of councils, failure to make those tough decisions will lead to reserves being exhausted and the likelihood of a section 114 notice in the next couple of years could not be ruled out."

What happens next?

The full council will meet in Bridgwater on Wednesday (22 February) to approve the final budget.

If the budget is passed, you will receive your new council tax bills in the post ahead of the new financial year, which begins on April 6.