Local Government Reorganisation: South-east

Helen Maguire Excerpts

Tuesday 10th March 2026 Westminster Hall

[Dr Pinkerton]

As ever, I am grateful to the hon. Gentleman for his thoughtful, sagacious intervention. He will discover, if he is able to stay for the rest of my speech, that I will cover those fundamental topics: the funding of the transitional moment, and the certainty that joining two authorities together does produce long-term savings and the modelling that those assumptions rely on.

In late 2024, Surrey was placed on a fast-tracked path towards local government reorganisation. That process was triggered when the leadership of Surrey county council requested that the Government cancel the local elections that were scheduled for May 2025. That request was granted, and the result is that councillors elected in 2021 will now remain in office until April 2027, two years beyond their original mandate, and oversee one of the most significant and consequential restructurings of local government in our county’s history. The idea of cancelling elections has, more recently, fallen out of favour with both the Government and, as I understand it, the Conservative party. Sadly, for those of us in Surrey, that realisation came only after the Surrey Conservatives pulled the trigger on the policy that the Government had placed before them. Whatever one’s view of reorganisation, it is difficult to argue that such a profound change should proceed without giving residents the opportunity to pass judgment on those leading it. Local government reform should be carried out with democratic consent, not in its absence.

Alongside those democratic concerns sit serious financial questions. Over the past decade, several councils across Surrey pursued large-scale commercial property investments in an attempt to generate income as central Government funding declined. In some cases, those strategies have left councils carrying extremely substantial debt. The six councils that could form the proposed West Surrey council—Woking, Spelthorne, Guildford, Runnymede, Surrey Heath and Waverley—collectively carry around £4.5 billion-worth of debt. In my constituency, the then Conservative-led Surrey Heath borough council speculated wildly on commercial property between 2016 and 2019. It spent £113 million on a shopping centre with a knackered roof and a former department store riddled with asbestos. At the time, those purchases were described by the council’s then chief executive as “investments” that would help to secure the council’s long-term financial viability as Government funding declined. In practice, it amounted to a Conservative-run borough council borrowing heavily on the financial markets and through the public works loan board in the hope of defying the gravity of the cuts coming from Conservative central Government. Today, those assets are estimated to be worth around £30 million—not the original £113 million. They are operationally loss-making and together risk bankrupting my borough before we even reach unitarisation next year. Surrey Heath cannot afford to keep them but cannot afford to sell them because selling would crystallise the losses it has incurred.

[Helen Maguire (Epsom and Ewell) (LD)]

My hon. Friend is eloquently explaining the serious financial situations that many potential unitary councils will be in. They will be saddled with such financial burdens that it will be difficult for them to deliver the services that local residents need. A three-year financial forecast for East Surrey has identified a potential £35 million deficit. The Whitehall funding settlement does not currently reflect the real cost pressures that such councils will experience. Does my hon. Friend agree that Labour needs to fix a broken funding system and not leave residents paying the price?

[Dr Pinkerton]

I am grateful for my hon. Friend’s intervention. Labour may not have broken the local government system in Surrey but there is now an obligation to ensure that people who live in Surrey are not faced with the bankruptcy of their new unitary authorities on day one of those authorities’ existence, especially given the vital services that they will be delivering.

In neighbouring Woking—where there was another Conservative-run council in those fateful years—the gravitational denialism was even wilder. During the same period, Woking borough council accumulated debts that now stand at approximately £2.1 billion. It is said that that debt is so large that it directly impacts the Government’s borrowing capacity in international markets. Versions of that story are repeated across much of west Surrey: it is a pattern of behaviour that has, frankly, never been properly investigated. Its impact has been compounded by systemic failures in the auditing of local government accounts.