Bankruptcy fear Council needs 'exceptional financial support'

NORTH Somerset Council will need "exceptional financial support" from the government to avoid going bust next year.

- John WIMPERIS

The council cannot balance its budget for next year unless the government gives it new powers to raise money, a report set to go before the council's cabinet next Wednesday warns. Exceptional financial support could mean government permission to raise council tax by more than the usual 5% limit or a "capitalisation directive," which could mean borrowing could be used to cover day-to-day expenses.

North Somerset Council only managed to set a balanced budget for the current year in February by taking £9.1m out of its reserves, with one councillor warning that the council was "sailing very close to the rocks."

Now it faces a forecast budget gap of £25.864m for the next financial year. If the council cannot close the budget gap when it sets its budget in February, it will be forced to issue a section 114 notice effectively declaring bankruptcy.