Somerset Council is "selling off the family silver" for millions less than it was bought for in order to cover its day-to-day spending.

The council approved its budget for 2025/26 on March 5, agreeing an exceptional 7.5% council tax increase and it is pushing ahead with plans to introduce new parking charges and cut hundreds of staff. But that still left it £43m short from being able to cover its revenue spending next year.

So for the second year in a row, the council has been granted "exceptional financial support" by the government. Council leader Bill Revans (North Petherton, Liberal Democrat) said: "This is not a bailout or a long-term solution. We are asking our residents to pay more, and we will be required to sell our assets or borrow money to cover everyday running costs."

The support does not give the council any money, but gives it permission to use the money it gets from selling off assets, such as properties bought as investments by its predecessor councils, to cover its day-to-day spending. But these are recurring costs and assets can only be sold once. Taunton man David Orr said at the council's budget meeting that selling off properties to cover daily costs was "short-term and damaging."

The leader of the Conservative opposition on the council Mandy Chilcott (Minehead) said: "The family silver is being sold, its income lost but the debt remains for decades to come as funds are being used just to keep the council going."

She added that the assets are going for "tens of millions" less than they were bought for. Council papers show that, as of the end of 2024, the council had made £76.85m from selling off assets, which had depreciated in value after they were originally bought for a total cost of £104.56m.

As in many areas across the country, Somerset Council is facing a crisis as the demand for and cost of adult and children's social care services increases faster than council funding — and it is set to continue to face giant budget gaps in future years. It is expected to face a £101m black hole in 2026/27 — rising to £190m by 2029/30. Ms Chilcott said: "The black hole seems to get ever deeper and darker."

Somerset Council came into being in April 2023 but just a few months later, in November, it declared a "financial emergency." It took the decision then to sell off the commercial investments it had inherited from the county and district councils it had replaced. Under normal circumstances, money received for selling off properties would have to fund the council's capital budget.

Councils set two budgets: a "revenue budget" covering day-to-day ongoing expenditure, and a "capital budget" of one-off spending such as new infrastructure. The budgets have different funding streams, with income such as council tax and parking charges funding the revenue budget, and grants and contributions from developers the capital budget. It is only due to the permission granted by the government that the council is able to continue the "capitalisation" of using profits from sales of assets to fund its revenue budget.

Speaking at the council budget meeting on March 5, Mr Revans warned that if the council could not balance its budget, it would be forced to issue a section 114 notice which would see government commissioners take over its finances. He told councillors: "It's our democratic responsibility to run this council and it's us who were elected to do that. This is not a situation of our making or our choosing but it is our responsibility to resolve it."

Mr Revans described Somerset's exceptional council tax increase agreed with the government as "above the cap by a modest two-and-a-half percent," warning that if Somerset ended up in the hands of government commissioners, they would raise council tax by double digits. He added that council tax bills in Somerset would remain lower than in Wiltshire, Dorset or Cornwall. The council tax increase means people living in a typical band D property will pay an additional £129 a year, or £2.49 a week.

Councillors voted 59-34 in favour of passing the budget, with two abstentions — despite warnings that voting down the budget would force the council to issue a section 114 notice, as no alternative budgets had been proposed. But opposition councillors said they feared voting in support of the budget would be seen as supporting the plans to introduce parking charges, a decision which had been taken on Monday March 3 by the council executive.

Mr Revans said: "It is clear the funding model is broken and I welcome the government's commitment for reform to funding in key areas of pressure like social care and special educational needs and disabilities. The situation for local government remains critical and we need action urgently, or councils like Somerset will simply run out of money."