Somerset Council is not at immediate risk of declaring bankruptcy, according to its interim finance chief — despite facing a multi-million-pound black hole in its budget.

The authority has slashed its projected gap for 2026/27 from £73 million to £41.4 million in the space of a month, and is aiming to cut this further before final budget talks next month. The improvement follows intense pressure on spending and exceptional financial support from the Government.

Speaking at a scrutiny meeting in Taunton on Monday, 28 January, interim chief financial officer Clive Heaphy said the council had "moved slightly away from a financial emergency" but still faced "deep issues".

"We need to match our spending to our income without reliance on exceptional financial support, reserves or one-off savings," he told members.

The council is relying on capitalisation directions — permission to use money from selling land and buildings for day-to-day costs, which is usually not allowed — to avoid issuing a Section 114 notice, which would amount to effective bankruptcy.

Mr Heaphy said reserves remained "not at the level where we need them to be" but did not currently pose a risk.

If the council cannot set a legal budget by Monday, 11 March, it will be forced to issue a Section 114 and face government-appointed commissioners.

Somerset's shrinking shortfall

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• Original 2026/27 gap: £101 million
• As of December 2025: £73 million
• As of January 2026: £41.4 million
• Target: mid-£30m range by March executive meeting

Councillor Dave Mansell (Green, Upper Tone) raised concerns over heavy reliance on asset sales: "We've avoided doing something better with that money... Our officers are overstretched, and it's still going on."

Councillor Henry Hobhouse (Lib Dem, Castle Cary) said soaring special needs and social care costs were unsustainable: "It's more expensive to send a child to Chilton Cantelo than to Eton — and it really isn't good enough."

The executive committee will meet today (11th February) to set housing rents. A special executive meeting on Tuesday, 25 February will finalise savings plans. The full budget will go before councillors at the Canalside venue in Bridgwater on Monday, 4 March, with a fallback meeting scheduled for Wednesday, 6 March if needed.

A permanent chief finance officer will be appointed after the budget is passed.

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Reporting by: Daniel Mumby/LDRS