Local Government Finances: Surrey

Al Pinkerton Excerpts

Thursday 22nd January 2026 Commons Chamber

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

The amount of money that local government authorities have, such as Surrey county council and the new east Surrey and west Surrey unitary councils, has a huge day-to-day impact on residents. It determines the provision of services and the protection of our communities, and it is essential to the many businesses and voluntary organisations in the area through both policy and the many direct contacts held with local service providers.

We heard again this week claims that the Government are boosting funding for councils, but the reality does not live up to the rhetoric. Surrey county council’s budget is being reduced by over £50 million for the next financial year. Surrey is negatively impacted more than any other area despite increased demand and escalating costs just to maintain existing service levels.

The Government’s calculations simply do not provide enough money for statutory services such as adult social care provision—and we all know about the urgent action that is needed to improve the special educational needs system and support available for children, schools and families. Instead of investing in services, the Government are slashing central grant funding for Surrey. Despite that, Surrey county council has managed to put forward a balanced budget, thanks to hard work led by Councillor David Lewis, but the situation as it stands is unsustainable, and the risks are mounting. The Government need to act.

In addition to the counterproductive funding decisions being made by the Government, we have the added complication of local government reform. Changing the structures of local authorities is a complicated matter. It requires changes in contracts, staffing, location and every other aspect of running a large and complicated organisation, yet we have no information on how the transition will be funded. It cannot possibly come from existing budgets if services are to be maintained, given the situation I have outlined. There is no clarity on what will happen to staff during the transition. Many jobs are at risk, and some have already sought new, more stable opportunities elsewhere. All face additional pressures as a result of reorganisation, and the risk is that important decisions will be delayed, leaving Surrey stuck in stasis.

Beyond transition, we must look at the foundation of the new unitaries. We all know the concerns about local authority debt. Some councils, such as Runnymede borough council, which covers a big chunk of my constituency, were able to operate a commercial strategy with sound financial management, meaning that the risk of high debt was mitigated by clear controls and revenue provisions. However, they are the exception. Too many local authorities borrowed heavily without the knowledge or systems to manage the risk, and none did so more disastrously than Woking borough council.

Given the size of the authority, the failures at Woking are unparalleled, both in terms of the scale of the debt and the failure of financial management and scrutiny, yet, despite announcements that the Government are proceeding with local government reform, there is still no clear plan about what to do with the Woking debt. In October last year, the Government announced debt relief totalling half a billion pounds for Woking borough council in 2026-27, but that still leaves more than £1.5 billion of debt, and under the Government’s plans, that may shortly become the liability of residents across west Surrey.

[Dr Al Pinkerton (Surrey Heath) (LD)]

The hon. Gentleman is giving an excellent speech that has really drawn out the pressures on his constituents, as well as on mine and on those of the hon. Member for Farnham and Bordon (Gregory Stafford). West Surrey unitary authority as a whole faces the prospect of beginning its life with £4.5 billion of debt. The hon. Gentleman raised a very important point about the vital public services that need to be paid for. My constituents are concerned that when west Surrey unitary authority comes into existence, those public services could falter and fail on day one, and I am sure his constituents are concerned, too. Through the hon. Gentleman, I ask the Minister for reassurance that that will not happen and that some kind of financial package will be offered to my constituents and those of the hon. Gentleman.

[Dr Spencer]

I thank the hon. Gentleman for his intervention, although it sounds like it was more for the Minister than for me. He has given the Minister time to prepare for his inevitable question, which I hope she addresses in her speech.

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[Dr Spencer]

My hon. Friend is a lot harder in his language on this issue and I very much respect him for that. At the very least, we need to have a well thought-out plan and strategy for what is going to happen with the block of debt. There is a variety of different options for how it can be managed and dealt with. Here is the fundamental problem that my constituents—service providers, charities and businesses—raise with me and are really worried about: that decisions made in a neighbouring local authority, which they have had no involvement in or dealings with, will have a material impact on them when the west Surrey unitary authority is set up.

I realise that the scale of the debt is a huge and complicated problem. I do not envy the Minister in trying to find a way through. I am glad that we have this forum for debate this afternoon, but we need to have these debates and discussions so that the west Surrey unitary authority—and, frankly, others that are being set up that face similar problems—can be dealt with fairly and so we know what is coming down the tracks. My residents are not going to be punished for decisions made in other authorities that they never had the chance to vote for. That is fundamentally unfair.

By the way, in some ways this is not something that we are unused to in my part of Surrey. We sit on the penumbra—just on the outskirts—outside London, and there are plenty of policies that come from this awful Mayor of London that affect us in a whole range of negative ways and which we do not have the ability to vote for. Unfortunately, this situation is far and away the most substantial we have faced, and there is so much fear, concern and uncertainty about what may be coming down the track.

Of course there is a huge irony in all this, because Surrey is one of the largest contributors to the Exchequer in our country. Cutting local authority funding, and impacting services and the many contracts that local authorities maintain, risks serious harm, not only locally in Surrey but to the national economy. Let us consider some examples.

If the Government do not effectively fund local highways, that will lead to deteriorating road conditions, resulting in more temporary emergency repair works. We all know the nightmare that that causes, with delays, costs of millions in lost work hours and missed appointments, and longer transit times for goods. That damages the Surrey economy and, by virtue, the national economy. If the Government do not effectively fund adult social care, that will cause bed blocking in hospitals and pressure on health services, impeding effective recovery and care.

If the Government do not effectively fund planning services, that leads to lengthy delays in assessing applications for homes and businesses and, crucially, risks enabling rogue development, which blights Surrey and other areas. Although planning enforcement remains a discretionary service, there is a real risk that it is increasingly seen as a “nice to have” and not an essential tool to protect communities. Evidence shows that enforcement rates continue to fall in the face of funding pressures. Inappropriate and illegal development—people essentially cocking a snoot at the planning system, and building anyway—is a serious problem in my constituency and in places across the country, and my residents are rightly incensed. Critical to stopping this activity and turning the situation around are not only stronger enforcement powers—for which I have been campaigning for years—but, at the very least, the resources to do proper planning enforcement.

[Dr Pinkerton]

In my area—perhaps in the hon. Member’s, too—we have had increased housing targets of up to 150% as a consequence of this Government’s decision. I understand their commitment to house building, but such targets open up the floodgates to opportunistic development—development that is unplanned. It requires incredible expertise in planning departments to ensure that such development is appropriate and that there is enforcement where necessary. Those are exactly the kind of services that risk being cut at just the time when we face the greatest pressure. Does he agree that we need some kind of financial resolution to ensure that these services are continued into the future?

[Dr Spencer]

I thank the hon. Member for raising housing targets and planning in local authorities. The majority of my constituency is covered by Runnymede local authority and, I think, roughly a third by Elmbridge local authority. In the Runnymede authority, there is a local plan, so there is no risk of the opportunistic development that he mentions. In the Elmbridge local authority, there is no local plan, so there is opportunistic development. Applications are under way that are causing huge concern to local residents in the Cobham, Downside, Stoke D’Abernon and Oxshott area in particular. In fact, at the end of last year, I wrote to the Secretary of State along with councillors from Elmbridge to raise our concerns about the fact that, because of local government reorganisation, again Surrey has found itself stuck in stasis.

There is a local plan in Elmbridge. Can that be put together by the time we hit the election of the shadow authorities? When you think about it, the term itself is an awful one—try knocking on doors and asking for support for the shadow authorities! What is Elmbridge to do? Do people living in the Elmbridge part of my constituency effectively have to wait a year and a half, until we have the full authority going when the shadow authority transfers over, before we can have some sensible progress when it comes to getting plans in place to protect people from opportunistic development? That is before we even talk about the scale of the housing targets, whose spread is disproportionate in Elmbridge; and I will ask the Minister later about the absence of a commitment for a Surrey mayor, who would in part be responsible for planning decisions. I hope Members can see that it is all a bit of a mess, and my constituents and local businesses are stuck in the middle.

No topic is more sensitive or concerning than where we find ourselves with special educational needs provision. We all know what happens when that is not fully funded. I welcome the work that the county council and Councillor Jonathan Hulley have been doing to improve transparency and engagement locally, really turning up the dial on what is happening for families and children with special educational needs, but ultimately we need national changes to services and support, and the funding to bring forward delivery. Without the local funding, the opportunities for children to reach their full potential are limited. It leads to failure demand, which is when services do not provide what is needed early on, thereby creating more demand in the system later, and that harms and limits children. That is notwithstanding all the pressures on families and siblings and on schools, which are going above and beyond to try to support those children.

The Government know these risks—I know the Minister knows and appreciates them. I hope the Government also know that it is a false economy to cut costs right now. The resulting economic and social impact of not funding these essential services will be calamitous locally.

Of course, as night follows day, I fully expect Government Members and others to see this as an opportunity to blame the Conservative Government, and of course I acknowledge that local government has struggled as a result of difficult financial decisions over the years, but there really is no more capacity for cuts. That is why we need to address the issue now. I want to use this debate as a plea to move beyond any sort of blame game or political posturing and work together to address the real risks that we face and establish a sound financial basis for effective local authority finances.

Given the clear risks, more than anything else we now need certainty. Residents and businesses need to know that they will not be shackled with high costs resulting from other local authorities’ poor financial management. Businesses and charities that have contracts and partnerships need certainty about their future. We all need to know that there will be adequate funding so that we all retain access to the essential services that local authorities provide. That cannot wait until after the May elections. Our voters need to know what authorities they are voting councillors into. They need clarity over the scope of the authorities’ powers. This debate is the Minister’s opportunity to answer the questions of 1.5 million Surrey residents.

How will local authority debt be dealt with? Will central Government ensure effective funding, or do Ministers intend to rely on constant tax rises despite the cost of living pressures? These are council tax rises—taxes on working people, as she and the Government, I assume, would define them. Will we have a mayor in Surrey? If so, can we have the details? How can we prevent the long-term risks if the Government continue to prioritise short-term funding cuts? For once—just for once—will this Government put Surrey first?

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[Miatta Fahnbulleh]

We are already working with all the authorities involved. That is why we put in place £500 million for Woking local authority. We have been working with it historically, and we will continue working with it to resolve this. I cannot give a timeframe, in part because resolving this requires all parties involved to come together to understand the scale of the problem and, critically, how we can work together, using the levers available to us. I hope that the hon. Gentleman hears that there is a shared commitment to resolving this, and we will work with the constituent local authorities to get a resolution.

[Dr Pinkerton]

Will the Minister give way?

[Miatta Fahnbulleh]

I will make a little progress, if I may. I acknowledge the pressure that social care is creating for the local government finance system; that is squeezing vital services. The hon. Member for Runnymede and Weybridge mentioned planning, but we see this issue across services that are not non-statutory. Ultimately, the core thing that local government can deliver is effective services that build our communities and hold them together, and we all want to preserve that. That is why we are driving through pretty punchy reforms across children’s social care, for example. That is the biggest transformation in a generation; there will be an historic £2.4 billion of investment over the multi-year settlement period in the Families First partnership programmes. We are building a national care service based on quality care, backed by £4.6 billion of additional funding available for adult social care in 2028-29, compared with 2025-26.

We will bring forward a full White Paper on special educational needs and disabilities, because we understand that there is pressure, and the impact that has on local government finances. We must find a way to deliver the best possible services for children and families who need support, and must do so in a sustainable way.

[Dr Pinkerton]

I am terribly grateful to the hon. Lady for giving way. She has been extremely open in her responses so far. One side effect of the financial pressures that Surrey faces as a consequence of special educational needs is the so-called safety valve agreement. That has had consequences for a proposed school in my constituency, Frimley Oak Academy, for which money is designated. The Department for Education agrees that it should go ahead, but as a result of the safety valve agreement, Surrey cannot go ahead with it, because of that school’s ongoing operational costs. That is an example of financial constriction having a material effect on the provision of a vital educational offering. Will the Minister perhaps take that point away, and inquire whether the situation could be freed up to ensure that the school can come to my constituency?

[Miatta Fahnbulleh]

I am happy to take that point away, and either my Department or the DFE will write back and provide an answer to the hon. Gentleman.

Let me address the question about devolution and the devolution process, and the move towards a mayor. We are absolutely committed to devolution. I have spoken to the leader of Surrey council and made it clear that we want to move forward. For us, the first step is creating a strong strategic authority that is empowered to start driving economic change and can bring constituent authorities together for strategic decision making. We want to move forward with that at pace, so we will work with the new unitaries, and with partners on the ground, to build a strong economic footprint, and build the institution that allows us to move to the next stage of devolution.