Surrey County Council’s Debt Surges by 48%, Raising Concerns

Surrey County Council has reported a significant increase in its debt, reaching £1.1 billion for the 2024/25 fiscal year, marking a steep climb of nearly 48% from £726.9 million in the previous year. This surge places Surrey among the local authorities with the highest debt levels in the UK, raising alarm among experts and local leaders.

A recent report by the BBC Shared Data Unit highlighted that three boroughs within Surrey, including Woking, are among the most indebted in the country. Woking Council, in particular, has the highest debt per capita, with an astonishing £20,601 owed for each resident. This figure is more than double that of Spelthorne, which stands at £10,252 per person. Runnymede also appears on the list, with a debt of £6,608.79 per resident.

Local Government Reorganization and Financial Strain

Woking and Runnymede are expected to be grouped with Guildford in a new unitary authority, a move driven by the government’s local government reorganization plans. The financial pressures facing these councils have sparked concerns about the sustainability of their borrowing practices. According to Jonathan Carr-West, Chief Executive of the Local Government Information Unit (LGIU), the current borrowing levels are “extremely worrying.” He described the situation as a “payday loan” model for local governments, indicating a precarious reliance on short-term loans to finance ongoing operations.

The rising debt levels, combined with escalating borrowing costs, have resulted in a larger portion of council budgets being allocated to debt repayments. This trend has led to cuts in essential services, even as residents face increasing council tax bills. Carr-West emphasized the long-term consequences of asset sales, stating, “Once they’re gone, they’re gone. So that was public value that is now passing into private hands and that won’t come back now.”

Surrey County Council leader Tim Oliver acknowledged that pressures on services, such as social care and highway maintenance, are contributing to the rising debt. He noted, “All our key services are facing higher demand, higher costs, and reduced funding.” Oliver indicated that balancing the budget will require transformative changes in how services are delivered.

National Debt Trends and Government Response

The BBC’s analysis revealed that councils across the UK added a total of £7.8 billion in debt over the past year. A growing percentage of this borrowing is being used to cover day-to-day budget shortfalls rather than finance long-term projects. More than 30 councils have sought exceptional financial support from the government, amounting to £1.3 billion.

A spokesperson from the Ministry of Housing, Communities and Local Government (MHCLG) stated, “While councils are responsible for managing their own budgets, we know that the current funding system is broken.” The government has announced over £3.4 billion in new grant funding for local services this year, in addition to £69 billion already allocated, to help bolster council finances. The spokesperson also emphasized the need for reforms to ensure that the funding system is fit for the future.

Neither Woking nor Spelthorne borough councils provided comments regarding the BBC Shared Data Unit’s findings. Instead, both authorities referred to their ongoing improvement and recovery plans as they navigate these financial challenges.

With ongoing discussions about local governance and financial sustainability, the situation in Surrey serves as a critical case study on the broader challenges facing local councils across the UK.