Surrey unitary council ‘could be bankrupt from day one’, say MPs

One of the two new unitary authorities confirmed for Surrey could be saddled with billions of pounds of debt before it has even launched.

The government confirmed on Tuesday it will replace Surrey County Council and the area’s 11 borough and district councils with unitary authorities covering the east and west of the county by 2027.

But with the current councils in Woking and Spelthorne both becoming part of the new West Surrey Council, it is feared their huge combined debts could bankrupt the new authority.

The Ministry of Housing, Communities and Local Government is paying off £500m of Woking’s debt and said it would “continue to explore what further debt support is required”.

Figures from the BBC’s Shared Data Unit show the councils merging to form West Surrey Council – Woking, Spelthorne, Guildford, Runnymede, Surrey Heath and Waverley – have a combined debt of £4.5bn.

Of that amount, Woking owes £2.1bn and Spelthorne owes £1bn.

Those forming East Surrey Council – Elmbridge, Epsom and Ewell, Mole Valley, Reigate and Banstead, and Tandridge – owe a total of £285m.

Even with the government’s £500m bailout for Woking, West Surrey Council still stands to inherit a debt of £4bn.

It has not been confirmed what will happen to the £4bn, but a spokesperson for three Liberal Democrat MPs in Surrey – Zöe Franklin, Will Forster, and Al Pinkerton – said the party already had “grave concerns” over West Surrey Council’s financial stability.

They said: “At the moment, it could be bankrupt from day one. We will continue to press the government to ensure that this council won’t start on the back foot.”

Councillor Catherine Powell, leader of the Residents’ Association and Independent Group on the county council, said she believed West Surrey Council was doomed to fail.

“All the debt and high needs will be in the west, leaving the east debt-free with low needs, it’s a recipe for failure,” she said.

The Ministry of Housing, Communities and Local Government said any future financial support for the unitary councils would have to deliver value for money, and would be subject to councils showing they are trying to clear the debt themselves.

A spokesperson said: “We have committed to supporting a new unitary authority with interim financial support for any legacy debt servicing costs from Woking Council until a final decision is made.”

Spelthorne said it would set out next month how it believes it can significantly reduce its debt without government support.

Woking did not respond to a request for comment.