Christmas funding crises mean West councils face tough choices

Most of us think of Christmas as being about mince pies, mulled wine and Santa.

But there is one tradition that befalls our local councils does not involve anything remotely festive. They have to work out how their financial settlements from the government will effect their overall budgets next year.

In the West of England, like elsewhere in the country, several local authorities have either warned of impending financial peril, or have already suffered serious shortfalls in their budget.

Councils are legally obliged to balance their revenue budgets each financial year, a task that has becoming increasingly difficult.

Here, we look at four West Country councils battling to balance their books.

With a population of about 250,000, North Somerset includes the seaside towns of Weston-super-Mare, Clevedon and Portishead.

North Somerset Council is a unitary authority, meaning it handles all local services for the area, from waste collection to adult social care.

At the start of December, North Somerset Council warned that it would “almost certainly” have to increase council tax above the cap set by the government.

Currently, it is allowed to raise rates by a maximum of 4.99% each year.

That is still well above the current rate of inflation (3.2% for November 2025) but clearly not enough to cover its costs.

The council has forecast a £25m shortfall in its budget next year, blaming ongoing social care costs, and a historic low level of council tax charges.

Liberal Democrat council leader Mike Bell said: “We want to be completely honest with residents. There is no painless option left.

“Higher council tax rises are now unavoidable if we are to keep essential services running and avoid a financial crisis that would do far more damage to our communities.”

He went on to warn that without charging more, the council could be forced into “emergency measures,” which would involve providing only the minimum legal level of some services, and making drastic cuts to others.

How much extra residents can be expected to pay is not yet clear, although figures as high as 20% have been mooted.

The full budget, including extra charges, is expected to be presented to councillors in February.

Gloucester City Council serves a population of more than 130,000.

As a district council that is part of Gloucestershire’s two-tier council system, it does not have responsibility for all local services, but does find itself in a very particular financial pickle.

At the start of December it emerged the council had a financial deficit of £7m combined from both the previous and current financial year, and it no longer has any cash reserves.

Even more incredibly, the council had gone effectively bankrupt 18 months ago.

A storm of issues ranging from a cyber attack, the poor performance of some investments, and a rather optimistic expectation of how much money it would make from parking, have resulted in the authority seeking a bailout from the government of up to £17.5m.

While councillors from different political persuasions have sought to deflect blame during the fall-out, the Liberal Democrat Council leader Jeremy Hilton said: “I never thought it would get as bad as this. It’s a shock we’ve got to this point.”

While the council waits on news of its bail-out request, it is looking to sell off some of its commercial assets.

At the end of November Swindon Borough Council announced it faced a funding gap of £27m next financial year.

Even after selling off many of its commercial assets and making other savings, the authority said the growth in demand for its social care services, especially for children, was to blame.

Taking children into care can be hugely expensive for local councils, which have a legal obligation to do so.

In Swindon, social care now accounts for more than 80% of the authority’s annual budget.

A plan to reduce costs via early intervention in future is being put in place, with the council predicting it can reduce its funding gap to zero over the next three years.

Quite how it can do this without making serious spending reductions elsewhere to its budget is unclear.

The Labour-run authority has a big 2026 ahead.

After passing its budget in February it faces all-out elections for the first time in May.

For all the dire warnings made by the other councils, the one that has faced the worst situation of them all in recent years is Somerset.

Just months after its formation in 2023, it declared a “financial emergency,” facing a budget shortfall of £100m.

Since then, despite a slew of cost cutting measures and the loss of hundreds of jobs, the gap for next year still tops £70m, with the authority continuing to propose further cuts while ramping up charges and fees.

Meanwhile, the council is again considering asking the government to raise council tax above the 4.99% cap from April, after doing so earlier this year.

Residents in Somerset saw their council tax bills rise by 7.5% in April in a bid to reduce the funding gap.

Somerset Council chief executive Duncan Sharkey said that local government was suffering a “lingering death” due to its lack of money.

Meanwhile, as the Labour government delivers on promising multi-year funding, this fiscal tradition will no longer be an annual affair.

The warnings of impending financial peril however look set to continue, as does what is becoming another annual event, council tax rises.

Wherever you live, if you pay council tax, it is likely to go up by at least 4.99% in April.