Surrey County Council Faces Record Debt Surge of 48%

Surrey County Council has reported a dramatic increase in debt, experiencing one of the largest rises among local authorities in the United Kingdom. According to a report from the BBC Shared Data Unit, the council’s borrowing has surged nearly 48 percent in just one year, escalating from £726.9 million in the fiscal year 2023/24 to £1.1 billion for 2024/25.

At the borough level, Woking stands out as the most indebted council in the UK on a per capita basis, with a staggering £20,601 of debt per resident. This figure is more than double that of the next most indebted authority, Spelthorne, which has £10,252 per person. Runnymede also ranks among the top ten councils, with £6,608.79 of debt per resident.

Concerns Over Rising Debt and Service Funding

The significant debt levels have raised concerns among experts and local leaders. Jonathan Carr-West, Chief Executive of the Local Government Information Unit (LGIU), expressed his apprehension regarding the sustainability of such borrowing practices. He described the situation as “extremely worrying,” likening the reliance on short-term loans to “payday loans for local governments.”

As councils in Surrey grapple with soaring debt and increasing borrowing costs, debt repayments are consuming a larger portion of their budgets. This trend means that even as residents face higher council tax rates, they are likely to receive fewer services. Local authorities across the region have resorted to selling off assets to generate income and maintain financial stability. Carr-West emphasized the long-term implications of this strategy, warning that once public assets are transferred to private ownership, they are unlikely to return to public hands.

Surrey County Council leader Tim Oliver attributed the debt increase to rising pressures on essential services, including social care and children’s services. “All our key services are facing higher demand, higher costs, and reduced funding,” he stated. He acknowledged the need to balance the budget for the upcoming year while also transforming service delivery methods.

Government Response and Broader Financial Context

The broader financial landscape for local authorities is concerning. BBC analysis indicated that councils across the UK added a staggering £7.8 billion in debt over the past year, with a growing reliance on borrowing to cover day-to-day operational costs rather than funding long-term infrastructure projects. More than 30 councils have sought exceptional financial support from the government, totaling £1.3 billion.

A spokesperson for the Ministry of Housing, Communities and Local Government (MHCLG) acknowledged the challenges faced by councils, stating, “While councils are responsible for managing their own budgets, we know that the current funding system is broken.” The spokesperson highlighted ongoing efforts, including over £3.4 billion in new grant funding for local services, in addition to the £69 billion already made available this year, to help bolster council finances.

Despite the gravity of the situation, neither Woking nor Spelthorne borough councils provided official statements regarding the BBC Shared Data Unit’s findings. Instead, both authorities referred to reports on their improvement and recovery plans.

The financial strain on Surrey County Council and its boroughs underscores a significant challenge for local governance in the UK, raising questions about sustainability and the future of public services in the face of increasing debt.