The UK Provisional Local Government Finance Settlement for 2026-27 to 2028-29 provides a multi-year funding framework with £3.9 billion extra cash for 2026-27, equating to 5.8% growth if councils max council tax rises. Somerset Council, facing ongoing financial pressures, welcomes the stability but anticipates seeking exceptional permission for council tax increases above 5%, potentially raising Band D bills by 7-10% combined with precepts. This means modest rises for residents, balanced by protections like 95% income floors for some authorities.
Overview of 2026 Finance Settlement
The settlement introduces the first three-year deal since 2016, allocating provisional funds via updated needs formulas post-Fair Funding Review 2.0, including £2.4 billion for children’s services and £180 million for neighbourhood support. Core spending power rises 23% cumulatively by 2028-29, with 2026-27 seeing 4.3% real-terms growth assuming full tax precepting.
Key features include Revenue Support Grant redistribution, business rates baseline reset, and Section 31 grants; council tax referendum limits set at 5% plus 2% adult social care, with exceptions possible. Contingency funds buffer unforeseen costs, prioritizing social care amid national pressures.
Implications for Council Tax Nationally
Councils can raise tax by up to 7% without referendum (5% general + 2% care), but those with low bills and funding gaps like Somerset qualify for exceptional support. Overall, 95% income protection applies where post-reform funding drops over 15% from 2025-26 baselines, mitigating shocks.
Real-terms floors protect fire services; multi-year visibility aids planning, though inflation risks remain. IFS notes 3.8% real growth in 2025-26 precedent, varying by authority needs.
Somerset Council’s Funding Position
Somerset receives allocations via deprivation indices and needs formulas, cautiously welcoming the deal amid £73 million projected gaps from social care demand and inflation. Leader Bill Revans highlights tough savings already made (£34 million staff cuts), positioning for Exceptional Financial Support (EFS) third year running.
2025-26 saw 7.49% rise to £1,857.61 Band D (Somerset portion), below national average despite pressures; 2026-27 likely mirrors with EFS request for over 5%.
Somerset Band D Breakdown 2025-26 (Baseline)
| Component | Amount (£) | % Increase |
|---|---|---|
| Somerset General | 1,593.67 | – |
| Adult Social Care | 263.94 | – |
| Somerset Total | 1,857.61 | 7.49% |
| Police/Fire Precepts | Varies | 5% |
| Parish/Town | Varies | Unlimited |
Projected Impact on Somerset Tax Bills
Somerset eyes 4.99% minimum rise, seeking EFS for 7.5%+ to plug gaps without service cuts; combined precepts could push total bills 8-12% higher for Band D properties. Residents in lower bands see proportional hikes, e.g., Band A up ~£100 annually.
Multi-year settlement aids budgeting, but SEND deficits and care costs (£25k/week per child) necessitate rises; no referendum if under cap.
Pressures Driving Somerset Increases
Social care consumes majority budget, with placement shortages inflating costs; national model deemed unsustainable per council statements. Inflation, demand growth, and business rates volatility exacerbate £73m shortfall despite savings.
EFS allows asset sales (offices/properties) for services; government reforms promised by 2028 offer long-term relief.
Mitigations and Resident Support
Discounts (25% single occupancy), exemptions, reductions for low-income/disabled apply; hardship payments available. Council urges early contact for tailored relief amid cost-of-living strains.
Bands fixed on 1991 values; check GOV.UK for appeals. Multi-year funding enables efficiencies, potentially stabilizing future rises.
Support Options Table
| Relief Type | Eligibility | Bill Reduction |
|---|---|---|
| Single Occupancy | One adult resident | 25% |
| Low Income CTR | Assessed means-tested | Up to 100% |
| Disabled Band Reduction | Wheelchair/special room need | One band down |
| Exemption | Vacant/second homes/students | 100% |
| Hardship Payment | Exceptional circumstances | Discretionary |
Broader Context for Somerset Residents
Bills fund schools, waste, libraries, police; Somerset’s below-average rates reflect rural/low-deprivation profile, but care demands high. 2026 settlement’s £5bn+ grants nationally trickle via formulas favoring needs.
Watch final settlement early 2026 for confirmations; parish variations add 10-20% locally (e.g., Bridgwater). Settlement fosters fairness, though CCN calls for SEND clarity.
UK Local Government Finance Settlement 2026 offers Somerset planning stability amid pressures, likely meaning controlled tax rises via EFS to safeguard services without bankruptcy risks. Residents face incremental hikes but gain from protections and reforms.
Nikhita Jose is a journalist and content writer covering local news, community affairs, and public interest stories in Somerset. She focuses on clear, accurate reporting and brings a thoughtful, reader-first approach to regional journalism.