THE leader of Somerset County Council has described the authority’s financial situation as “unacceptable” after it overspent by more than £2M in the past year.

David Fothergill made the comment at a cabinet meeting in Taunton on Monday morning (June 11) when the council’s end-of-year financial reports were discussed.

He clarified the position was better than had been predicted earlier in the financial year, and praised the work of council staff to turn this around, stating that the council was “not heading towards the iceberg”.

However, he warned more changes would be needed going forward – particularly to the funding of children’s services.

The cabinet met to discuss the council’s financial out-turns – the actual, final totals of what it spent, as opposed to the predictions that were made when the budget was set last year and subsequently monitored.

Council spending is divided into two key areas: capital spending, which covers one-off infrastructure costs such as schools or roads, and revenue spending, which denotes the ongoing provision of existing services, such as adult social care and children’s services.

The council underspent on its capital budget, partially as a result of projects being moved into the next year of the ongoing programme.

Despite approving more than £7M of new capital work since December, and overspending on small road schemes by £325,000, the council underspent  its capital budget by more than £13.5M.

In revenue, however, it is a very different story, with children and families’ services overspending by £9.72M.

Adult services managed to underspend by £1.319M overall – but this is largely due to savings being delivered outside of the learning disability service, which overspent by £3.674M.

Under advice issued by central government in 2016, councils can put capital receipts towards projects which normally come under revenue spending, on the condition they “generate ongoing revenue savings in the delivery of public services and/ or transform service delivery to reduce costs”.

Taking all departments into account without these capital receipts, the council’s total revenue overspend in 2017/18 was £6.182M.

With just more than£4M of capital receipts from the past 12 months, this reduces the overspend to £2.18M.

A council spokesman said: “Selling surplus assets to reinvest in important capital projects has always been part of the day-to-day financial management for local authorities and we, of course, do this on a sustainable basis.

“All local authorities make use of the flexibilities that are in place to fund transformational work – work that changes the way we work – from capital funds. That is why those flexibilities were introduced.”

The £2.18M will have to be written off by the council dipping into its dwindling reserves.

Commenting on the overspend, councillor Mandy Chilcott said: “We need to dig very deep and cut our cloth again.”

Kevin Nacey, the council’s outgoing director of finance and performance, said that the council’s reserves had been lower at previous times,  citing 2009/10 as an example.

He added that more money has already been earmarked for children’s services in the coming years, with £5M being put into the department in 2019/20.

Mr Fothergill said the budget for children’s service “will have to be re-set going forward.”

He added: “To overspend by £2.18M is unacceptable. However, it is a lot better than it looked like we were going to be.

“We are not heading towards the iceberg, but we do have to take action.”

Leader of the Lib Dems at SCC, Jane Lock, said: "SCC has thrown money at their inadequate children's services to ensure a better Ofsted rating, now they have reached the heady heights of requires improvement this has become a juggernaut that cannot be stopped.

"Without spending even more to support services for children and families there will be a swift deterioration, unfortunately there have been too many quick fixes and the result is a £13 million overspend which simply cannot be addressed."

The cabinet voted unanimously to approve the out-turns for both capital and revenue spending.