Did they really save money?

Dear readers

Today’s issue of Somerset Confidential® is for all of our readers. At the heart of this piece is the refusal of the council to answer a question during the council’s open books period, about savings they claim have been made.

Please don’t forget that we can only provide articles and investigations for you because of our paying subscribers.

We do not rely on advertisements or a large corporate head office to finance our work. It is simply the funds from paying subscribers that keep us going.

If you would like to subscribe, the cost is £30 a year and we’ll bring you an extra 48 exclusive articles a year in return. You can subscribe here:

Thank you.

Andrew Lee - Editor

The draft accounts have been published for Somerset Council for the year to 31 March 2026. The numbers are in but they do not necessarily make for an easy read. Council accounts are complicated and go on for pages. Getting to the true meaning of the figures can be difficult.

But some things sound straightforward enough. For instance, the council claims to have made savings of £53.55m during the financial year. Which sounds impressive.

They make that claim on page 11 of the narrative section of the report that precedes the accounts. This is important as we shall see.

But the real question is where will we find these reported savings when we turn to the detailed financial results for the year? In fact, if you turn to the profit and loss account, you will see a very different story.

Total gross expenditure on services in 2025 was £1,455m. For 2026 that figure has not fallen, but has actually risen to £1,458m, an apparent increase in spending of £3m.

that figure has not fallen, but has actually risen to £1,458m

If you look at the net position, expenditure less income generated, however, the position is easier to reconcile to the claim of cost savings. The total net expenditure fell from £631m in 2025 to £609m in 2026.

Even so, what is interesting about these figures is that they show the council has not reduced core expenditure at all. It has instead managed to bring in other sources of income, several of which are chunky increases in government grants.

And that fall in net spending of £22m is still a long way off the £53.55m proclaimed on page 11. We should also add that the cost saving was meant to be just that, a saving of costs. Increasing income is not the same thing.

Partly because increases in income are less certain and less easy to control into the future than decreases in costs.

The one thing that any organisation has the ability to control is its cost base.

Is the £53.55m claimed by the council a forecast of future savings, savings identified in the budget, or are they savings the council has actually delivered to the reported cost base of the council in the year to 31 March 2026?

If they are the latter, then why do we not see a £53.55m cost reduction in the reported accounts?

During the open accounts period, one eagle-eyed resident from Taunton decided to ask just that question. He asked for a detailed explanation as to how the savings stacked up with the accounting records. And he asked that question on 17 July.

This is something that anyone has the right to do, but only during the council’s open books period. This year that ran until 9 August.

On 27 July the finance team wrote back to our resident to say they: “wanted to follow up with an email on this request, given 10 days have passed. The team are working on your request and we hope to give you a response mid-later this week.”

we hope to give you a response mid-later this week

Our intrepid resident naturally assumed they were going through the maths to come up with an answer.

So when on 31 July he finally received a response, he was more than a little perplexed. The response was summarised thus: “The information requested relates primarily to the Narrative Report, budget monitoring and transformation programme activity rather than to the accounting records underpinning the Statement of Accounts. Such information does not form part of the books, deeds, contracts, bills, vouchers, receipts that support the accounts production which are subject to inspection under the Local Audit and Accountability Act 2014. The Council therefore does not consider the information requested to fall within the scope of the public inspection rights exercised during the accounts inspection period.”

However, in responding, the council has selectively quoted the Act. What the Act actually says in full is: inspect the accounting records for the financial year to which the audit relates and all books, deeds, contracts, bills, vouchers, receipts and other documents relating to those records….

The council is also wrong in its interpretation because the Act clearly relates the inspection of books and records to the work of the auditor. The audit of the accounts includes the narrative section. Auditors are obligated to read, validate and ensure the narrative section is consistent with other accounting papers.

It may well be true that the information requested by the resident in this instance was onerous to provide. After all, initially the council appeared willing to provide it but only changed their mind after two weeks, presumably after realising the scale of the task.

But that is a matter that has been tested in the courts. In Moss v Royal Borough of Kingston Upon Thames (2022) Judge Mrs Justice Thornton ruled that the law requires records to be produced regardless of the time and effort required. Specifically, she ruled that: “there was no provision for a relevant authority to refuse to process an inspection request on the grounds of the time it would take to do so.”

All that said, if that was the view of the council that they were not obligated to provide the requested information, there was absolutely no justification to take 14 days to respond to say so. They could have said that within 24 hours.

Why the delay? A cynical person might conclude it was to wind the clock down so there would be little time for follow-up questions. But happily, as we have said before, we at Somerset Confidential® are not cynical people.

In any case, the resident wanted to test the answer he had been given. It did not feel right and he wanted a second opinion. Who could he appeal to?

The answer, it turns out, is no one. The external auditors do not have the power to overturn the council decision and nor does the Local Government and Social Care Ombudsman. This leaves each council to effectively mark its own homework.

Now at this point it would only be fair to observe that Somerset Council do, on the whole, provide full answers to all the questions that we have asked on the accounts over the years. This instance is a rarity, but it is an important one.

Which is why we are going to dwell on the detail of the request in more depth.

Firstly, it must be a matter of considerable concern that Somerset Council do not consider their budget and tracking against that budget to be part of their accounting records underpinning the report and accounts.

Remember they said: “Such information does not form part of the books, deeds, contracts, bills, vouchers, receipts that support the accounts production…”

Such information does not form part of the books…

Because the cost savings against a budget are meaningless unless they tie back to the overall state of the council’s finances. The only figure that matters in the end is the savings made against the cost base reported in the accounts.

We should remember that the state of the council’s finances was dire in the year to 31 March 2025. And in the year to 31 March 2024 the council itself declared a financial emergency. So their problems with balancing the books are well known and established.

In these circumstances it is especially important that the cost savings made can be tied to real numbers in the accounts.

So how does a council (indeed any organisation) build a budget?

• You start off with what you actually spent in the previous year. Then you add in the cost of extra demand for your services (things like Adult Social Care and Children’s Services never stand still).

• Then you take off the cost savings that you hope to make.

• At the same time, you treat income in a similar way. You start off with the actual income received in the prior year, be it grants from government or receipts from services you sell.

• Then you estimate the amounts you hope to increase those income streams by and create a budget for income. There will usually be a series of assumptions and narratives supporting the hoped-for increase.

Having got a budget for income and expenditure, you do not put it on a shelf and forget about it!

Each month (if not more frequently) you compare the actual numbers, those that will eventually be reported in the report and accounts of the organisation, with the budget.

So each month, the prior year, the budget and the results to date for the current year are compared. But the important point is that the three components are linked together and must be linked together. Any budget that did not link current actual performance with prior year performance would be meaningless.

In this case, the anticipated cost savings are the bit that matters. The point of the savings program is to take costs out of the cost base. The question the council has refused to answer (at least to our resident who asked them) is: did the council take £53.55m out of the cost base?

did the council take £53.55m out of the cost base?

And if so, then why did gross costs rise instead of falling?

And given that:

• The budget is indeed an integral part of the accounting records that underpin the published accounts and

• The council claims they cannot readily tie in the claimed savings to the accounting records of the council

…..then what savings, if any, have been made to the actual cost base of the council? We need to know because that is important. Not just for now but for the future solvency of the council.

If those cost savings have not been made to the actual reported cost base of the council, then the council will still be unable to balance its books without government support.

If the budget and the savings made against it have no relationship to the accounting records, as the council has claimed, then what are they? Are they real savings at all?

It is essential that the council can demonstrate the link between the reported cost savings, the budget against which those savings were made and the accounts.

Without being able to demonstrate the link between those figures, the cost savings could be a work of fiction. And the council have to date responded that they are unwilling to demonstrate the link. We can only hope that they are not unwilling to show it, because they are unable to show it.

unwilling to show it, because they are unable to show it….

The saving grace here should be that even though the council refuse to allow the public to see a reconciliation between reported costs, budget and savings, the Department of Housing, Communities and Local Government will certainly be insisting on a reconciliation now that the council is subject to close scrutiny under the Best Value Notice.

This issue is much bigger than avoiding an unwanted question. It goes to the heart of Somerset Council’s ability to survive. If the council cannot explain how the cost savings relate to the accounts, then we are obliged to question if the cost savings are real.

If you found this news release interesting, please share it with others so they can read it too:

Share

Why not gift a subscription as a present for a friend or family member? You can do that here:

Give a gift subscription

Somerset Confidential® is a reader-supported publication. To receive new posts and support our work, consider becoming a free or paid subscriber.