Local Government Reorganisation: South-east

Tuesday 10th March 2026 Westminster Hall

[Martin Vickers in the Chair]

11:29

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

I beg to move,

That this House has considered the impact of local government reorganisation in the South East.

It is a pleasure to serve under your chairmanship today, Mr Vickers. I am grateful to the hon. and right hon. Members from across the House who will be contributing to this debate.

Local government is the tier of government that is most closely woven into people’s everyday lives. It is where national decisions become local realities: the roads we drive on, the services that support vulnerable families, the planning decisions that shape our towns and the community spaces that bring people together. It is for that reason that I support the principle of devolution. Decisions should, wherever possible, be taken by those closest to the communities they directly affect. But as is so often the case in public policy, the difficulty is not the principle, it is the implementation.

In Surrey, implementation is already raising serious concerns about scale, financial sustainability and a process that has moved forward with a troubling democratic deficit. This debate concerns the south-east of England more generally, but colleagues from across the region will speak about how reorganisation is affecting their own counties and communities. My perspective naturally comes from Surrey, where those concerns are already becoming clear. Size, remoteness and financial fragility are among them, and we must add to that mix the glaring democratic deficit.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for securing this debate. I spoke to him beforehand, so he knows what I am going to say. I want to support him—that is the reason why I am here—and I want to give an example that happened in my constituency and which is similar to what the hon. Gentleman is referring to. Two councils, Ards and North Down, were merged together, and one issue that was put forward as a “must do” was the financial and administrative savings with two councils being able to do the job of one, but that did not work out. Does the hon. Gentleman agree that while efforts to streamline governance should be welcomed, more action must be taken to provide adequate financial support to cover one-off reorganisation costs without compromising the delivery of services such as, for example, waste services?

[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.

[Peter Lamb (Crawley) (Lab)]

Is the hon. Gentleman astounded, as I am, that the majority of that debt is with the public works loan board, which sits underneath the Treasury. Where was the Treasury when that debt was being allowed to accumulate?

[Dr Pinkerton]

I could not agree more with the hon. Gentleman. I will come on to talk about a systemic failure, as I see it, in the power that section 151 officers of borough councils have in effectively signing off the ability of a council to repay debts when accumulated. That is a power that I think may be far in excess of the skills that they have. After all, there is no separate mechanism to determine—from the Treasury or from the PWLB, for example—the ability of a council to fulfil its obligations.

It is therefore entirely reasonable that residents ask a simple question: why should communities that played no role in accumulating that debt now be expected to inherit its consequences through a newly-created local authority? If reorganisation is intended to create a stable future for local government, it would be deeply concerning for any new authority to begin life already burdened with billions of pounds in inherited liabilities. I ask the Minister what assurances the Government can provide that any future West Surrey authority will begin life next year on a financially sustainable footing? It cannot be right that my residents face the realistic prospect of their new unitary authority being bankrupt or effectively bankrupt on day one of its existence, given the critical services that councils are expected to provide.

The scale of borrowing in Surrey also raises wider questions about financial oversight in local government—this is where I will answer the hon. Member for Crawley (Peter Lamb). Local authorities rely on statutory finance officers—section 151 officers—to ensure financial prudence, yet the scale of borrowing undertaken by some councils suggests that existing safeguards have not always been sufficient to prevent high-risk commercial strategies. This debate is often framed in terms of protecting section 151 officers from excessive political pressure, and that may well be necessary, but it is also true that section 151 officers hold significant authority within council structures and must themselves be subject to proper scrutiny and accountability—something that is often lacking.

Councillors very often perceive that they are not allowed to overly scrutinise 151 officers because of members’ codes of conduct. Will the Government therefore consider whether additional safeguards or oversight mechanisms are needed to prevent similar situations arising again in the future, particularly as councils become larger, their finances become more complex and the risks become even greater.

There are also important questions about the size and structure of the authorities now being proposed. Under current proposals, the new West Surrey council would serve approximately 657,000 residents. By comparison, the average non-metropolitan unitary authority in England serves around 265,000 residents, with most serving fewer than 300,000. Authorities of the scale we are talking about today risk weakening democratic accountability, diluting local knowledge and making decision-making feel more distant from the communities they are meant to serve.

Ministers have suggested that having larger authorities will deliver financial efficiencies. In support of that argument, the Government have relied on modelling produced by the County Councils Network, which happens to be chaired by the very same leader of Surrey county council who locked Surrey into this fast-track pathway in the first place. Despite several Parliamentary questions seeking clarification, it remains unclear what independent modelling the Government have undertaken to substantiate those claimed savings. I ask the Minister again: have the Government undertaken their own economic modelling of the projected financial benefits of local government reorganisation in Surrey? If so, will that modelling now be published publicly?

Finally, we should recognise that all of this is unfolding while councils continue to deliver vital services under considerable strain. In my constituency, the concerns most frequently raised with me relate to special educational needs and disabilities provision. Hundreds of families contact me about problems with education, health and care plans—incorrect names, incorrect details, long delays and support packages—that simply do not meet the needs of the children concerned.

For the past three years, Surrey has recorded the highest number of SEND tribunal appeals nationally. At the same time, residents regularly contact me about deteriorating road surfaces, potholes causing vehicle damage and wider infrastructural pressures. These are not abstract policy debates; they are real challenges affecting families who rely on local government services every single day.

[Alison Bennett (Mid Sussex) (LD)]

I thank my hon. Friend for setting out with such exemplary clarity the challenges of going ahead with local government reorganisation, particularly on the timescales that have been set. He represents a Surrey constituency, while I represent a constituency in West Sussex, where we are currently awaiting the outcome of the Government consultation on whether the new unitary will be a single unitary authority covering all of West Sussex, second in size only to Birmingham city council, or our preferred option of two future west Sussex unitary councils.

Does he not agree that constituents need local decision-making and for there to be accountability, so that when pothole or SEND provision fails, constituents have a close relationship with their councils and can get the answers that they deserve?

[Dr Pinkerton]

I feel every sympathy with my hon. Friend’s campaign for two unitary authorities; I was very supportive of there being three unitary authorities for Surrey, and we were sadly denied that. That would have delivered the much more local accountability to which my hon. Friend refers. I wish her good luck in her campaign for two unitary authorities, and for the local accountability which, as she recognises, is so important for her constituents.

There is also a wider concern that I hear frequently from the voluntary and charitable sector. Many charities organise themselves around existing local authority boundaries. They rely on those relationships for funding, partnerships and the delivery of services. Local government reorganisation risks sweeping away that social infrastructure —boundaries change, funding streams shift and relationships built up over years can disappear overnight—but this is happening at precisely the moment that charities may be more important than ever, helping communities to pick up the pieces during a period of institutional upheaval and ensuring that vulnerable people do not fall through the gaps that inevitably appear during major restructuring.

Against that backdrop, local government reorganisation is creating substantial additional workload for councils and their staff, many of whom are already working under tight financial constraints and significant workforce pressures. Local government reform should strengthen local institutions, not weaken them. It should produce councils that are financially stable, democratically accountable and close enough to the communities they serve to understand their needs. Those are the standards that fundamentally matter, and the ones against which people across Surrey and the south east will judge the outcome of this process.

[Several hon. Members rose—]

[Martin Vickers (in the Chair)]

Order. I remind hon. Members to bob, as indeed they are doing, if they wish to be called.

14:45

[Peter Lamb (Crawley) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Vickers.

Local government is an area of great interest to me. I did my master’s dissertation on models for English devolution; I have worked at the UK’s leading think-tank on devolution; for 17 years I worked as an adviser to local authorities, and I have served in local government in a county council and a district council, including almost a decade as a council leader. From 2015 onwards, I have also been involved in various devolution proposals for Sussex in one way or another.

I say all that because, despite that background, I still cannot get my head around what the Ministry of Housing, Communities and Local Government is trying to achieve with all this. That is despite talking to the director at No. 10, special advisers and Ministers on this policy area. In fact, the more I delve into it, the more opaque it becomes.

My understanding is that this reform all kicked off with Angela Rayner and Rachel Reeves—two people without any background in local government—making a deal: more money now, in return for local government reform. The only reason they thought it would deliver any results was that the County Councils Network had, for many years, been putting forward a document that seemed to set out a case that there would be financial savings if county councils were merged at the unitary level.

Those figures relied on population sizes of roughly half a million people—that figure is critical; I re-read all the statements made by local government Ministers on this before this debate, and it is a figure that has been repeatedly stated and was consistently pushed for the better part of a year. The reason was that, when we look at the County Councils Network figures, the £2 billion savings it talked about delivering, which it presented as if it were an annual statement—it is not, it is over five years—are achievable only when dealing with population sizes of 500,000 or greater.

The problem, when we come down to it, is this: for the Labour party, that is completely unelectable. We have pockets of support within the south east, but we do not have larger footprints. With the politics unravelling around this question, we have started to talk about smaller sizes for unitary authorities, but here we run into a problem: unitary authorities do not save money. Merging existing councils saves money. We could merge districts together—that would save money. We could merge counties together—what an idea!—and that would save money. We could merge existing unitaries together—that would save money. However, when we start creating unitaries, we are merging two different tiers together; if that is a smaller footprint than existing upper-tier authorities, it will always end up costing more money than the alternative.

We now have a proposal that will not deliver politically or financially. I will return to the finances in due course, because the situation is much worse than people think it is. This proposal is somehow still on the table long beyond the original document that set this all out. If there are other figures on this then, like the hon. Member for Surrey Heath (Dr Pinkerton), I would be delighted to see them. I have asked for them repeatedly. However, when Governments do not release data, we come to the conclusion that they do not have data that backs up their case. The evidence base here is very hard to find.

The other argument that comes up very frequently is that two-tier areas are too complicated and people do not know who runs what. I have lived in two-tier areas essentially my entire life, apart from when I was at university, and that is not something I have come across, despite being in roles where I might expect to come across it very regularly. If we say tiers are a problem, adding mayors across the country and encouraging people to set up third-tier authorities increases the total number of tiers at the local government level. It adds to the complexity rather than decreasing it.

We hear bizarre arguments about issues such as waste collection and waste disposal authorities, as if the idea that someone collects the bins and someone gets rid of them is complicated. What particularly grates my gears about that argument is that there are many unitary authorities that are not waste disposal authorities. Take the Thames valley waste authority as an example—take Greater London—take Greater Manchester: in all those areas, waste is collected that is then disposed of on a larger footprint. There are many such areas where the powers do not perfectly align, and people manage to get through them without any great deal of controversy.

The argument for much of this change, particularly with the mayoralties, was that we were would get wider public sector reform, which would deliver astounding savings. The problem with that argument is that the footprints that the change was supposed to create would align the mayoralties, the police authorities and the integrated care boards, so that we would get all the services in one area and they could deliver efficiencies. However, we are now talking about creating police authorities on a larger footprint than the existing mayoral footprint, so the two would no longer correspond. There will be a much more complicated structure now, with deputy mayors sitting on different boards in relation to it. Similarly, the ICBs have had to expand, so they no longer go along with the devolution footprint.

The only form of public sector reform that we can now carry out around this process is reform of local government on its own, and that will not deliver the projected savings. Most of the areas that a district council deals with and most of the areas that a county council deals with do not interface in any meaningful way when it comes to savings. If they did, the County Councils Network report, which it paid PwC to produce in order to create the strongest possible case for reform, would have put that forward. Instead, the report solely states that savings can be made by reducing senior officer numbers. As anyone who has been involved in the sector knows, many of those posts no longer exist in the numbers that they did at the time that the PwC report was formed. At this point, such figures simply do not exist.

The only people I can find who have any difficulty with the idea of two-tier areas are civil servants and politicians from unitary authority areas. One might imagine what other people might feel if we went to their areas and tried to impose our culture upon them. There has also been the claim that these reformed authorities will be engines for economic growth and housing delivery, but let us think about it in this way: I was the leader of a local authority that delivered over four times our Government-assessed numbers for housing, whereas—unfortunately—Mid Sussex district council, which was previously under Conservative control, often did not even have a core strategy for that entire period, never mind delivering any actual housing numbers.

We are about to create unitaries where the areas that deliver large volumes of housing, and that need such housing at an affordable rate, will be swamped by rural communities. What do we think will be the dominant factor in these new authorities, where the politics is controlled by rural communities? Will it be a focus on economic development? Will it be a focus on housing delivery? Or will it be stamping down on those two things, as we have seen time and time again? This plan does not deliver on the Government’s missions; it kills them off, as many Members have tried to point out in recent times. The reality is that demography is destiny, and rural communities will have control over those authorities.

Returning to the issue of finance, in my area the actual cost of the merger is estimated as three times greater than the estimate put forward so far. In fact, even on the most optimistic assumptions, on these footprints no savings would be delivered until the end of the next Parliament—but it is more likely that there would not be any saving at all. In fact, the situation gets even worse than that. Who knows when most of the country’s leisure centres were built? I will give Members a clue—it was in the early ’70s. What happened in the early ’70s? We merged all the district councils, and they looked at their accounts and said, “I am not handling this over to the next council”, and they got busy spending.

We can see that in the country currently. The reality is that, until the protections come in with the new authority, people will be getting money out the door. Debt is going up, budgetary decisions are being postponed and savings are being put off in order to invest in local communities while there is one last chance to do that. Over the next 12 months, section 114 notices are far more likely than in any preceding period.

I will move on to the issue of democracy. Resident satisfaction surveys of local authorities have consistently shown a positive correlation between the perception of a local authority and the size of that authority. It is not the other way around, as though suddenly authorities delivered much more effectively when they got to a much greater footprint—why would that be the case? More remote Government is not necessarily going to make people any happier.

Currently, the average size of authorities in the UK is seven times larger than not the European average, but the authorities in the European country with the next largest—and this programme will make our authorities 14 times larger than those. Why are we such an outlier? Why are councils in Europe, which have far greater powers and far greater money than we do, apparently perfectly capable of running their local areas, while in our areas we have to bring things up to a central Government level? Again, I think that the civil service has far more to do with this programme than any actual rational thought does.

The changes will also prevent people from having any meaningful relationship with councillors. In the UK, we are far less likely than in any other part of Europe to have independent councillors. The reason is that with footprints of this size we cannot build a meaningful relationship with a councillor. The distance cuts people off from their democracy and any sense of control, and increases their scepticism. Conversations about area committees are frankly meaningless; anyone who has actually worked with those structures knows they do not replace meaningful representation.

The fundamental problem we will run into is geography. When we strive to get population sizes in rural areas, we come up with enormous geographies; for my patch, we are most likely talking about an area in excess of 50 miles wide. Greater London is just over 30 miles wide. What common interests can exist in that footprint? What common services? What common identity? We will end up with competition between the different communities in those areas, and policy will be driven by those communities whose voices are heard loudest in whatever administration is in control. That will, again, mean that the rural beats out the urban. Urban communities such as mine, which includes some of the most deprived parts of the country—certainly in the south-east, at least—will lose out as a direct result of the restructure.

There are 71 Labour constituencies that trusted us at the last election, but that will see their quality of life decline as a direct result of the policy as well. When we look at the numbers, it might well be that if the Labour party, sacrificed those 71 constituencies, it would never be in office again. I am sure that Opposition Members would be delighted; it is why I thought they would be pushing the policy, not the Members on the Labour Benches. Talk to any Labour party organiser and they will say that the policy undermines our organising model. They are up in arms.

Most Labour Governments in the last century would not have happened had there been a reform such as this. We are arguing for a policy that no longer reflects the principles on which it was first brought together. It no longer reflects the same goals: it will not save us money, it will be more remote and it will undermine the deprived communities that this Government are allegedly in place to serve. It is clear that the advice given to Ministers in MHCLG is poor; we have seen that in just one month, with fair funding miscalculations that took place, and we have seen that with the elections, with the conclusions that we now all have to deal with.

Having been through the detail of the policy over and over again, I cannot see any way that it is not another example of that poor advice.

[Alison Bennett]

I am very much appreciating and enjoying the hon. Member’s contribution to the debate. Can I suggest that, when it comes to getting local government in England on a sound financial footing, the real elephant in the room is putting social care on a financial basis so that councils can deliver decent social care to our communities?

[Peter Lamb]

There are three areas, and social care is one of them. The finances of upper-tier authorities have been totally compromised, initially by the costs of social care, where we have still not taken decisions all these years after the Dilnot review. We all know that social care is slowly bankrupting councils. Go to any single council presentation on local government finance—whether a unitary or upper-tier authority—and that is the thing that will be mentioned.

Then there is SEND, which again has absolutely crippled local authorities’ funding to the extent that we allowed them to keep it off their books because the cost would have bankrupted them. That has now been taken away from them to be covered centrally, so that is one less problem to deal with.

Lastly, there are the costs of temporary housing, which housing authorities, like the districts, are mandated to provide. They have no control over it, and are often dealing with the consequences of central Government decisions that move more people into the area and create that level of housing need. However, those costs ultimately stem from a failure of housing policy in this country.

Those are the three areas bankrupting local government. Despite the fact that local government started out as the most efficient part of the public sector and has become still more efficient since, taking sensible decisions to maintain its survival, it cannot deal with pressures that are not being dealt with centrally. If we deal with those three problems, local government finance problems will go away—but they are central Government’s problems to resolve, and we have not yet quite resolved them.

I accept that all that is in motion, but when I talk to people in local government, very few of them want this policy. The reality is the boundaries are most likely going to end up lasting for another half a century—just look at the pain we are going through now; we are not going to want to go through it all again. We should not be embarking on something that will last 50 years when we cannot publish the evidence base because it is so weak. A pause is now needed to reflect on these proposals. I will continue to argue more and more loudly for that, adding more and more things to the debate about the best outcome here. I say to Ministers, “You’ve inherited a mess from other people; it wasn’t of your making and I really wouldn’t jeopardise your careers seeing this through.”

[Martin Vickers (in the Chair)]

May I remind the hon. Gentleman that we do not refer to other Members by name, but by their constituency?

15:00

[Calum Miller (Bicester and Woodstock) (LD)]

It is a pleasure to serve with you in the Chair, Mr Vickers. I thank my hon. Friend the Member for Surrey Heath (Dr Pinkerton) for securing this important debate.

Last October, together with my hon. Friend the Member for Henley and Thame (Freddie van Mierlo), I met with representatives of 48 parish and town councils from the villages and towns that surround Oxford. These hard-working volunteers are the lifeblood of local communities and the closest level of representation to residents. They were very clear that local government reorganisation is an opportunity as well as a considerable upheaval, and they had three tests for any new arrangement in Oxfordshire: first, that it should make the delivery of public services simpler and more efficient; secondly, that it should retain accountability for key decisions closer to residents and strengthen the role of parish and town councils; and thirdly, that it should make sense in terms of geography, history and existing structures.

Happily, those tests are similar to those that the Government have themselves set out—yet Oxfordshire is shaping up to be an important test of the Government’s approach to local government reorganisation. Ministers have set out clear criteria, and it is essential that they are applied properly to every proposal. On those tests, I believe the strongest fit in Oxfordshire is the One Oxfordshire proposal. Oxfordshire county council’s proposal is for a single county-wide unitary on the existing county geography. The county council says that this would save over £63 million a year, and it stands to reason that consolidating at the higher tier would be more efficient, as the hon. Member for Crawley (Peter Lamb) set out more eloquently than I could.

The county council already delivers services to over 750,000 residents and accounts for 85% of local government service expenditure in Oxfordshire. Keeping the county structure would avoid splitting critical services such as adult and children’s social care, SEND provision and homelessness. The main challenge to this approach is how it would sustain accountability at a suitably local level. To this, the county council proposes partnerships with town and parish councils, new area committees and other neighbourhood governance arrangements.

As well as local representation, what matters is that the shape of any new unitary authority makes sense to residents. A county-wide model follows the existing Oxfordshire geography, keeps the area together and is plainly easier for residents to understand than a plan built on split districts and cross-boundary complexity. By contrast, the Oxford city council-backed 3Councils proposal asks Ministers to move away from that starting point; the Government’s consultation states that it would split existing district areas and establish a Greater Oxford council, a Northern Oxfordshire council and a Ridgeway council.

That proposal is fraught with issues. It chops and changes existing district-level boundaries, even though the Government’s guidance says that districts should be the building blocks of new unitaries. It shoehorns in west Berkshire, which is in a different fire and rescue service area, even though the Government’s guidance says that proposals affecting wider public services need a strong justification. The Government say that 500,000 residents is the guiding principle, yet Oxford city council’s proposal documents put the populations at 240,000 for Greater Oxford, 265,000 for Northern Oxfordshire and 430,000 for Ridgeway.

Oxford city council argues for an exception, and that is of course open to it, but let us be honest about what it means. It means asking Ministers to depart from their own default principle not once but three times, while accepting greater boundary complexity. The question for Ministers is, what justification could there be for departing so far from Government guidance, and why import additional structural complexity and financial risk into Oxfordshire when there is a county-wide Oxfordshire option that does not require it?

Before we get to a new model for local government in Oxfordshire, we need to address transitional funding arrangements. The Minister is well aware of the challenges of funding the SEND system and the impact that underfunding has had on not only councils but families across the country. The proposal to meet 90% of the high needs block deficit in Oxfordshire with central Government funding is welcome, but Oxfordshire county council understands that this deficit will be defined as of 31 March this year, whereas new funding models will not begin until 2028-29. Will the Minister please set out how the likely additional funding for high needs will be met for the two missing years?

At the same time, Cherwell district council in my constituency was shocked that the Government advised, on 6 February, days before its budget-setting council, that they had made an error in the draft local government funding proposals and were cutting £2 million from Cherwell’s advised settlement. After interventions from local MPs, the Government provided a one-year additional grant to Cherwell, but the council and its residents have no certainty about the next two years of funding, with the threat of losing nearly 10% of income hanging over it. I hope the Minister will agree to meet me and the hon. Member for Banbury (Sean Woodcock) to discuss Cherwell’s future funding formula.

In October, the 48 parish and town councils were unanimous in opposing the 3Councils proposal. They saw it for what it is: a crude effort by Oxford city council to grab a larger area of land, which would break up existing rural communities, sever historic linkages between villages and market towns, and leave two other ill-funded residual councils as the collateral damage of a power grab that fails to meet the Government’s criteria. Reorganisation should be about better services, clearer accountability and stronger local government. It should not be about bending the rules after the event. In Oxfordshire, the Government have set the tests. They should now apply them properly.

15:06

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to see you in the Chair, Mr Vickers. I commend the hon. Member for Surrey Heath (Dr Pinkerton) for bringing this important subject to the House today. It is great to see MPs from across the House here in Westminster Hall, although with 400-odd Labour MPs and quite a few in the south-east these days, we might have expected more than one to come to speak in favour of this flagship Government policy—it is not entirely apparent to all of us why it is a flagship Government policy, but there we have it. Let us be frank: the hon. Member for Crawley (Peter Lamb) made an unconventional pitch to the Whips Office, but it was a pleasure and privilege to hear his very well reasoned and well thought-out case, obviously based on many years of experience.

There are two big things going on at the same time that quite often get conflated: the creation of mayoralties and the bringing together of different local authorities at unitary level, which we call local government reorganisation—LGR. The two things often get conflated, but today we are talking primarily about the second. I will be honest: we can make arguments in favour of unitary authorities, in favour of two-tier authorities, and in favour of three tiers—we can make all sorts of arguments—but if we are going to have this change, how we divvy up and carve up areas makes a huge difference. In my area, East Hampshire district council and Hampshire county council have been working hard on putting forward a good proposal.

One of the reasons this matters so much—previous speakers have raised this point—is the very high-cost items that will go into these new unitary authorities, principally adult social care and the high needs block, or SEND. In order to fund those costs for people at either end of the age scale, we need quite a lot of people in the middle. We need working-age adults contributing, and businesses contributing their taxes as well.

The hon. Member for Crawley talked about housing. One of the points that has not yet quite registered with everybody is the way that housing development planning will change. It will be on a different level, which will be further away—more remote—from the areas that are affected and could involve quite a lot of rebalancing of where housing goes. The hon. Member expressed the opposite view, but my fear is that in this new set-up, there will be the risk of more encroachment on to rural areas, because in the dominant urban areas, they will see less physical constraints for more sprawl out from those urban settlements.

The other point that I am not sure has quite permeated the public discourse is about identity. People often identify with the county and the town or village they are in. We have not yet given names to any of the new unitary authorities that might be created in the county of Hampshire, but they are almost certainly going to end up being, to some extent, artificial constructs—in the same way that, back in 1974, a lot of new identities were created, which was sometimes a difficult thing for people to deal with.

Whatever the pros and cons of different forms of local government, there is always a difficulty in the short term. Whenever anything is changed or reorganised, as anyone who has worked in business knows, there will be a great argument for, for example, moving the sales force to a regional level or back to a national level. Along the way, however, a lot of cost is incurred and effectiveness is eroded because people’s attention is moved from the key task in hand to what is happening in the organisation. Buildings have to be sold and redundancies made. All sorts of things affect operational effectiveness.

There is then still the question: what, ultimately, is the balance in terms of cost saving? I think that we are all grateful to the hon. Member for Crawley—I will call him my hon. Friend—who set out that it is really quite difficult to find material savings unless it is at a big scale. So many of the proposals that are coming forward are not at that scale—often for good reason, because it is difficult to create a meaningful identity in such a big area. There will, however, be some economies of scale. If bin collection is taken from the lower tier and put into the unitary, it should be possible to do that on a lower unit cost. There will also, however, be some diseconomies of scale, because some things will come from the upper tier and be moved into a smaller unit of geography, creating a diseconomy. I have no idea what the balance of those two things is, but we seem to be launching into this massive change—wholesale reorganisation—without knowing.

On the point about the upheaval along the way, whatever the end state is, I promise that in year one, there will not be a saving. There might eventually be something to look forward to, but we have enough economic troubles that I find it stunning that the Government should be considering entering into something that will make their fiscal task harder, at least in the short term and possibly in the long term.

I have tabled a number of parliamentary questions that have been answered in the name of the Minister before us today. Those answers have all been elegant, but they have not been illuminating. The charitable explanation came from her hon. Friend the Member for Crawley: maybe the Government just do not know what the data are. That might be true. It might also be true that they have a working assumption, but we are not being told.

15:12

[Mr Will Forster (Woking) (LD)]

It is a pleasure to serve under your chairship, Mr Vickers. I thank my constituency neighbour and hon. Friend the Member for Surrey Heath (Dr Pinkerton) for leading this debate and eloquently putting the case. I endorse his calls this afternoon.

I will use my time to talk about why local government reorganisation in the south-east is happening, as well as its opportunities and risks. LGR, as it is known for short, is happening in Surrey first because of the dire financial state of local government there. I have raised it with the Minister before, in one-to-ones, Committee meetings and the Chamber, so I know that she, too, knows that that is why LGR is happening in Surrey. It is almost inevitable because of the appalling decisions that have been made by the Conservatives who run Surrey county council, and boroughs and districts across my county.

Nowhere is it more true than in my constituency of Woking, where the former Conservative administration of Woking borough council borrowed more than £2 billion for risky commercial investments. It is a small borough council with the debts of a small country. My local authority borrowed and spent more than £700 million on a town centre regeneration scheme, which councillors originally signed off at £150 million. It borrowed money from the Government to loan to a private school, despite the fact, as I highlighted during Prime Minister’s questions last week, that a state school has a hole in its roof and a rotten floor. It then borrowed money to build, run and maintain a power plant in Milton Keynes. That raft of financial decisions will hurt my constituents and, I am afraid, those of my hon. Friend the Member for Surrey Heath, and the whole country, for years to come.

Where is the accountability in all this? Well, since those appalling decisions were made my constituents have voted out of office every single Conservative councillor on Woking borough council, and I am pleased they did. There is political accountability there, but where is the personal accountability? I have called for the former chief executive officer of Woking borough council, Ray Morgan, to lose his OBE. Investigations are under way into him and others; does the Minister agree that the former CEO should lose his honour straight away?

I am concerned about the legacy of debt that will be passed on to the new west Surrey council. I am pleased that the Government agreed, among previous Ministers, an unprecedented and historic write-off of £500 million of Woking’s debt. My constituents and I are obviously very grateful for that, but the money could not possibly have been repaid. I am pleased that the Government recognised that, but more debt write-off and more support are going to be needed to ensure that the new council does not start off bankrupt on day one. The Minister recently wrote to me outlining further support for west Surrey, as well as what we have agreed for Woking; will she comment on what further support the Government can bring?

Let me move on to an issue that is close to my heart. Members might think that being the MP for the most bankrupt and indebted council area in the country is about as bad as it could get. I am afraid I also represent the area where Sara Sharif was tortured, abused and murdered by her family. What makes that worse is that Surrey county council could have saved her on multiple occasions. From day one, the council wanted to take custody of her, away from her family, but did not. The day before she was murdered, the council tried to visit her to see whether she was safe but went to the wrong house. Surrey has shown systemic failure in looking after vulnerable constituents, and that was a tragic result.

Thankfully, children’s services will be broken up and divided between east and west Surrey, but I am terrified that the culture of not looking after vulnerable children will be passed on to the new west Surrey council, and I know that colleagues representing the east Surrey council area feel similarly. Will the Minister please work with me and others to ensure that our new council has a good culture that includes looking after vulnerable children and responding to MPs’ emails? That would be a stark contrast to the reality I see from Surrey county council.

Finally, I want to mention another risk of local Government reorganisation. Under the Conservatives, Surrey county council recently announced that it is going to end free school meal vouchers. The council is going to allow them to continue for Easter but, coincidentally, as soon as the elections are over, it is going to stop feeding vulnerable constituents over the holidays in my Woking constituency and across Surrey. That will mean no more free school vouchers in the May half-term or summer breaks. Will the Minister investigate that and ensure that Surrey is adequately funded so that our constituents are supported? Does she agree that it is shocking and deceitful that, under the cloud of local government reorganisation, the Conservative county council is trying to deprive children in my constituency of a healthy meal?

15:18

[Zöe Franklin (Guildford) (LD)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I am exceptionally grateful to my hon. Friend the Member for Surrey Heath (Dr Pinkerton) for securing the debate and outlining so eloquently his concerns and those of his residents. I thank all colleagues who have spoken; it has been helpful to weave together the different perspectives of those of us who are going through reorganisation and those who are experts in the field. I hope the Minister will take on board everything that has been said in the debate.

Like my hon. Friend, I support the principle of local Government reorganisation. I am sure we have all spoken to residents who are surprised and frustrated to learn that they have to deal with one council to fix potholes and a different one to get their bins collected. Simplification for that purpose is actually a good thing but, as we have heard from west Surrey colleagues such as my hon. Friends the Members for Woking (Mr Forster) and for Surrey Heath—it is a recurring theme in Surrey and for pretty much all councils in the south-east—reorganisation is frankly just about finance.

Colleagues have clearly and starkly illustrated that Surrey is in billions of pounds of debt racked up by Conservative-led councils, and it has been Liberal Democrat colleagues in local government who have led the way in turning councils’ finances around. That said, I am grateful to the hon. Members for Crawley (Peter Lamb) and for Strangford (Jim Shannon), who both rightly noted that savings are not always guaranteed. It is going to be “interesting” to see how things evolve and whether the savings presented to us will actually come to fruition.

Reshaping local government can make sense, but reorganisation succeeds only when it is done with communities, not to them. Across Surrey, residents, councillors and officers feel that the pace of the reorganisation process has left them struggling to keep up with decisions that will help to reshape local services. When we debated the draft Surrey (Structural Changes) Order 2026 two weeks ago, I raised concerns about the speed of the process and the lack of meaningful consultation. I highlighted the fact that when residents were asked, they said they wanted three authorities. The financial figures show that the difference between the cost savings for two versus three authorities across Surrey is relatively minimal.

When it comes to ensuring that a local authority reflects its residents, it is important that it gives them the sense of place that the right hon. Member for East Hampshire (Damian Hinds) referred to, which is really important to residents. The structural changes order came into force today; unfortunately, I have not yet had answers to my questions in the debate on it, but I am grateful to the Minister for confirming that I will have them shortly.

Members have articulated the serious financial pressures facing Surrey. Residents are understandably worried about historical debt, and how the cost of living crisis alongside that will affect them, whether that is through council tax harmonisation, the loss of valued community assets, or pressures on frontline services. Residents did not make the decisions that created the problems, yet they will be asked to shoulder the financial consequences.

I would welcome clarity from the Minister on what transitional funding and support the Government are going to provide for west Surrey and other authorities that are going through reorganisation. They are going to start their lives as new authorities on a potentially unstable financial footing. As colleagues have highlighted, west Surrey is looking at an unstable footing in the order of around £4 billion.

There is a wider question about the economic framework shaping the future of the authorities in question. The current proposals will give west Surrey strategic responsibilities that are similar to those of a mayoral authority, but without access to the equivalent long-term investment. Mayoral authorities benefit from 30-year investment funds, because the Government recognise that long-term certainty unlocks growth. If west Surrey and other new combined authority areas are expected to deliver the same strategic ambitions as a mayoral authority without the same tools, the Government need to explain how they expect those authorities to unlock the growth needed for them to economically succeed and serve their residents.

I would be grateful if the Minister could clarify two points regarding foundation strategic authority status. First, will the Minister give clarity on the pathway to a mayoral authority specifically for Surrey, and on the timing of any future mayoral election? Secondly, will she outline how the Government are going to ensure that areas that are undergoing reorganisation via the foundation authority route do not miss out on the growth funding available to mayoral combined authorities elsewhere?

On communication and governance, large-scale structural change depends on strong collaboration among county councils, district councils, officers, community organisations and Members of Parliament, yet many colleagues across Surrey, including me and my team, have struggled to obtain clear and timely engagement with Surrey county council. A particular example—I could give a litany of them—is my work alongside Guildford borough council, South Western Railway and Network Rail on progressing discussions about a potential new railway station in Guildford. We are struggling to get engagement from the county council, which is also the transport authority. This does not bode well for the wider essential communication needed to make the transition to new councils work. I would welcome the Minister’s thoughts on that.

My final Surrey-specific point relates to the parish councils and voluntary sector organisations across the county, which are also significantly impacted by local government reorganisation and deserve urgent clarity. These bodies provide vital hyper-local leadership. They support vulnerable residents, deliver local services and act as a crucial bridge between communities and the higher tiers of government. Many of them are, frankly, unsure what the new governance structures mean for their funding, commissioning arrangements and day-to-day interactions with the new authorities. Surely such crucial partners need clarity.

A specific concern that highlights the problem was expressed to me this week on behalf of parish councils. The parish council elections are due in 2027, but they will no longer align with the main-tier elections, so parishes will incur additional costs. Currently, those unexpected costs will have to be footed by parishes, so will the Minister outline what support they will be given for the unexpected electoral cost when elections do not align?

To move beyond Surrey, local government across England is under immense pressure after years of financial strain, rising demand in social care and SEND, and inadequate long-term funding. Reorganisation alone cannot resolve the structural challenges; it is part of the solution, and we desperately need it to work, but it is only part of the solution. We Liberal Democrats continue to argue that alongside reorganisation we need fair funding, proper recognition of the costs faced by rural and semi-rural areas, and sustainable, multi-year settlements that allow councils to plan ahead. That is why we focus so much on needing a cross-party solution to the social care crisis. Many county councils face having to spend enormous percentages of their budgets on social care, leaving wider budgets stretched to breaking point, despite their herculean efforts.

In conclusion, communities across Surrey, the wider south-east and England deserve local government reorganisation that strengthens them, not uncertainty that undermines them. We have heard from colleagues throughout the House about their grave concerns as experienced Members of Parliament and experienced individuals with backstories in local government, and about the concerns their residents have raised with them. I hope the Minister will reflect on the issues raised in the debate, take the steps needed to deliver, and work with colleagues across the House to deliver local government reorganisation that works for local people.

15:28

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I draw the House’s attention to my entry in the Register of Members’ Financial Interests on my roles as an unpaid parliamentary vice-president of both the Local Government Association and London Councils.

I congratulate to the hon. Member for Surrey Heath (Dr Pinkerton) on securing the debate. He, the hon. Member for Crawley (Peter Lamb) and my right hon. Friend the Member for East Hampshire (Damian Hinds) set the tone of a debate that has engaged, with a high degree of seriousness, not only with the issues that stem from the specifics of what is happening in Surrey but with what they say about the wider local government reorganisation debate.

It was interesting as a parliamentarian to be present, a short time ago, at a Delegated Legislation Committee in which Committee members agreed the abolition of the historic county of Surrey and its replacement with two unitary authorities. That was the conclusion of a long period of debate in which, as the hon. Member for Crawley outlined, the leaders of county councils in particular argued strongly that local government reorganisation on the footprint of the existing county structure would be a way to save money. Many district councils argued strongly against that idea, and it was called into question by many experienced unitary leaders.

We all recognise that there is a need to look again at our local government settlement. This country is already very under-represented in democratic terms at the local level, with the fewest elected politicians per capita of any developed democracy. It is also intensely centralised by comparison with most other countries, with decisions that would as a matter of routine be local decisions in most other democracies taken by Parliament or central Government.

I have a huge amount of sympathy for the Minister, because while she is from the Ministry of Housing, Communities and Local Government, council services touch on the work of the Department of Health and Social Care, the Department for Education, the Department for Transport, the Treasury, the Ministry of Defence and the Home Office. The observations that other Members have made about the impact of special educational needs and disabilities demonstrate that complexity, where an issue that sits outside the Ministry of Housing, Communities and Local Government is one of the single biggest factors in the viability of local authorities.

The last time we faced each other across the Dispatch Box, I asked the Minister, with particular respect to Surrey, whether there was an update on negotiations. Surrey had set out very clearly that its deficit on SEND spending sits at around £350 million, and the Government had been clear—in fairness, it was Department for Education Ministers—that they would pay off 90% of that deficit. The offer to Surrey was £100 million, which was significantly less than the 90% that we were promised at the Dispatch Box. This is not simply a matter of what happens in a single Government Ministry; it brings together services, activities and decisions across Government.

Reflecting on the long history of local government reorganisation, it probably predates the existence of our country as a unitary state. Certainly the role of some ancient Saxon kingdoms is quite akin to the behaviour of some local government leaders today. The particular challenges that come from the difficult relationship between central and local government are manifest here today.

With regard to recent developments, I spent 12 years in local government under the previous Labour Government and a further 12 years there under the Conservative Government who left office in 2024, and many of the decisions that were made then by central Government—statutory requirements placed on local authorities such as SEND arrangements, social care, the fair access criteria that were introduced, housing—were never fully funded. Since the early 2000s, there has been steady growth in the share of local government spending that is consumed by social care and housing. We have seen an erosion of the ability of our elected local leaders to deploy locally raised resources against local priorities, to the extent that social care now consumes around 70% to 80% of the budget of a typical social care authority. That is not sustainable.

Other Members have spoken passionately and with a degree of criticism about the impact that investment decisions at the council level have had. We all recognise that councils led by all of the parties represented here have made both good and bad decisions when it comes to investment, but we should be wary of criticising local leaders for having made decisions in good faith that did not end well. At a time when the public works loan board interest rate was 0.25%, the decision—even by a council—to take a loan and put it in the bank would have generated additional finance that could have supported local government services. Those decisions were not always innately wrong, but the impact of covid on local authorities’ investments in commercial property was absolutely devastating. Spelthorne, which has been mentioned today, is one example of that: what would have looked like an extremely sound commercial investment turned into a very bad one because of the impact of covid.

         We find ourselves today in a situation where Surrey is unusual. It is the only authority announced for the devolution priority programme that has got to the point of creating new successor unitary authorities. At the outset of this process, the Government were very clear that they were going to cancel the elections in all the devolution priority programme councils, which we voted against at the Delegated Legislation Committee that considered that matter. They did so on the basis that elections for the new unitaries and mayors would take place across the country. There were supposed to be elections this May for new mayors in Suffolk, Norfolk, Essex, Hampshire and many other places. Political parties and local leaders had been working on that basis, only to find after a 24-hour U-turn last December that the elections that were promised to go ahead were suddenly being cancelled.

All this delay and dithering is imposing costs. I met yesterday with a finance company that told me that the procurement of new finance systems across the local authority sector has simply ground to a halt in the absence of any clarity from Government about what is happening. The commissioning of new services in social care to address homelessness has collapsed, which I know concerns the Minister, as has the delivery of housing—both the pipeline of new applications and the completions of new properties. Two thirds of London boroughs report no new net additional homes. That is an absolute indictment of the state in which many of our councils find themselves because of the delay imposed by this process.

As the hon. Member for Crawley outlined, both the Government and the wider argument for this reorganisation rely on a now rather old report that was prepared by PricewaterhouseCoopers at the instigation of the County Councils Network to support the case for county-based reorganisation. It is clear from the evidence he presented that the hon. Member, who left us in no doubt about what he thinks of this process, knows of what he speaks. The start of the process was simple. Half a million people was the minimum footprint in order to secure savings. That was the level that the Treasury expected to see delivered. However, that is significantly larger than the existing footprint of most unitary authorities. As my right hon. Friend the Member for East Hampshire described, it risked losing the sense of place and identity. Ministers quite wisely backed off. They looked at the bids from the local authority areas that were instructed to submit them and settled on a smaller footprint.

That fundamentally undermines the case that this will result in significant revenue savings to the Government in the medium to long term, for the reasons outlined by the hon. Member for Crawley. A concern that the Opposition have raised a number of times on the Floor of the House is that the Government have no independent modelling or independent financial analysis to back up their direction of travel on these reorganisation decisions.

As all Members who spoke passionately about their enthusiasm for getting local Government right recognised, when we compare ourselves, sometimes unfavourably, to other European countries and ask why they seem to be able to build railways and public transport infrastructure faster than the United Kingdom, the answer is largely that those decisions are made at local and regional level; they are not made by central Government. Delivery of rail networks or citywide transport, for example, which I know is of concern to a huge number of Members where lots of good projects are on the stocks, is much faster and cheaper in many other countries. We need to look at what we can learn from their experience.

We need to reflect on the role of the Treasury. I have heard former Chancellors say that when the demand for additional day-to-day spending becomes unbearable, the temptation is to simply slow down the exit of capital from the door on major projects. One of the benefits of localisation is that it removes that temptation from Chancellors and ensures that things that are committed to, become deliverable at a local level.

There are many urgent pressures. One of the key concerns I hear from councils all the time is that the Government do not have a huge amount of time to think, not just in the sense of the parliamentary timetable but when we look across our country. Unemployment has been relentlessly rising every single month since the Government took office, homelessness has surged up 27% in London alone since the Government took office, debt is rising rapidly, planning decisions are grinding to a halt and housing delivery is grinding to a halt. We need to give local communities hope that there is a prospect of solving some of those matters. I share a concern with the hon. Member for Crawley, which affects us very directly. The decisions that the Government have made in the Home Office, speeding up decision making on asylum seekers, pushing those people out the door and up the road to the town hall which then has responsibility for housing them, is putting acute pressure on my local authority, his local authority and many others across the country who are doing their best in difficult circumstances.

It is very clear that a whole range of issues are brought to our attention by what is happening in Surrey. I am grateful to all hon. Members who have set out their particular concerns. I hope that, as a result of the observations made in the debate, we may see the Government come back with a revised set of policies that reflect a clear sense of place and the opportunity for all our constituents to know that they will have elected representatives who can make the decisions that they want to see made at a local level.

[Peter Lamb]

On a point of order, Mr Vickers. Regarding my earlier breach, I just want to apologise to you and to the Chamber for referring to my right hon. Friends the Members for Ashton-under-Lyne (Angela Rayner) and for Leeds West and Pudsey (Rachel Reeves) by their names rather than by their constituencies, and without forewarning. I was unaware of the process. I will make sure it does not happen again.

[Martin Vickers (in the Chair)]

Your apology is noted.

15:41

[The Minister for Local Government and Homelessness (Alison McGovern)]

It is a pleasure, as ever, to serve under your chairship, Mr Vickers. I am very grateful to the hon. Member for Surrey Heath (Dr Pinkerton) for securing today’s debate on local government reorganisation in the south-east. It is a very important issue for residents and businesses across the region and I welcome the opportunity to set out the Government’s approach, the progress that is being made and the opportunity that change presents.

Local government reorganisation is an opportunity to modernise how councils operate. For too long, many areas have been served by complex two-tier structures that divide responsibilities, duplicate cost and blur accountability. Residents often struggle to know which council is responsible for which service. I note the various contributions that have been made on that point. I think we would all agree that councils can always do better to help residents engage with them, but there is no doubt that there is evidence out there that the two-tier system does seem to add to confusion and a lack of accountability. Decisions to build and grow our towns and cities can take longer, with resources spread more thinly. We need clearer structures, stronger councils, quicker decisions, more homes and better services for local people. By moving to single unitary authorities we can create councils with the scale, leadership and authority to grow their economies, create jobs and opportunities, and deliver for communities, particularly in the services where pressure is greatest, including children’s services, adult social care and housing. Those areas were mentioned by a number of Members; I appreciate the contributions that they made.

I just want to make one point on identity, because I am sure we will debate the finances of the situation. As he often does, the hon. Member for Woking (Mr Forster) raised the very serious situation that that council has been through, but identity is also important. I hope Members will forgive me if they have heard me say this before, but before I was born, my own area was in a two-tier system, with Birkenhead and Cheshire as a two-tier council area. In 1974, before I was born, we became the Wirral in Merseyside. Now, we are the Wirral in Liverpool city region. Those different identities are complex and interconnected. There are some people I represent who would say that they are still Cheshire all these years later.

[Damian Hinds]

Yeah!

[Alison McGovern]

There are! And there are some people who identify as Birkenhead and many people who, as I do, think of themselves as Wirralian. These issues of identity are complicated. We need to take account of them and listen to what residents tell us, but my experience is that there is never one right answer.

Across England, the programme is progressing quickly. Proposals have been submitted and consultations undertaken, and the first decisions are now being implemented. The south-east is at the forefront of this work. It is home to cities such as Brighton, Southampton, Oxford and Portsmouth, which have a vital role to play not only in their local economies, but in our national growth story.



I turn first to Surrey, the most advanced area. Parliament has considered the order to establish two new unitary authorities, East Surrey and West Surrey, with elections taking place this May and new councils formally assuming responsibilities in April 2027. Alongside structural reform, we have committed unprecedented debt repayment support of £500 million for Woking borough council, reflecting historic capital practices at the council and the value-for-money case for acting to protect local and national taxpayers. A couple of Members with Surrey constituencies rightly pointed out the consequences for other Surrey residents; I agree that there are consequences for all citizens in the UK when that sort of thing happens. The hon. Member for Surrey Heath asked about financial sustainability. We are keeping that closely under review as we move forward with this process. The support that we have agreed is a first tranche, and we will continue to explore what further debt support is required at a later point.

A number of Members asked about modelling. In this process, it is for councils to bring forward their analysis of costs and benefits to make the case under the criteria. I add one word of caution: we have all discussed the situation with spiking demand in particular areas of cost. I am working with other Government Departments on that; as the shadow Minister, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds) said, local government is a complex mix when it comes to central Government policy. I spent three years on the Treasury Committee poring over the modelling on Brexit and other matters. It is not a precise science, as Members who have experienced Government know only too well.

[Damian Hinds]

As with many projections, some things are more uncertain than others. Typically, in business, revenues are really hard to project, but costs are a lot easier. Can the Minister share with us what the costs of the reorganisation are anticipated to be?

[Alison McGovern]

I thank the right hon. Gentleman; that is exactly the point that I am making. I am very conscious that I have spoken to many council leaders and finance officers in recent weeks who have experienced significant cost pressures in areas where we are in quite an uncertain policy environment. The right response to that is to work with the Department for Education, particularly on children’s costs, and others, to get the policy in the right place so that we can get those costs down.

[Damian Hinds]

I meant reorganisation costs.

[Alison McGovern]

I accept the right hon. Gentleman’s point about reorganisation costs; I will think about whether I can say more to him in writing about that—otherwise we will just go over this forever.

I now turn to the really important point made by the hon. Member for Woking. I probably cannot respond in this context to his specific question about honours, but I will take it away. I have immense sympathy with the points he raised, but I am conscious that investigations are ongoing. I will leave it there, but he was correct to make his case.

The removal of the Audit Commission—and what happened to local audit under the Government from 2010 to 2015—was in my view an absolute disaster. We will put it right with the reintroduction of local audit and much greater constraints on the sort of behaviours we have seen not only in Woking, but elsewhere. I will leave that there, too, but I could go on about it for hours.

I turn to Hampshire, Portsmouth, Southampton and the Isle of Wight. The Government have received a number of proposals and representations from councils. Across those areas, different authorities have put forward different visions for the future, some favouring multiple new unitary authorities while others, such as the Isle of Wight, have been clear in their preference to remain stand-alone. Those views, alongside the evidence submitted by other councils and stakeholders, will be assessed carefully against the criteria of sustainability, geography and public engagement.

I turn briefly to Sussex. Proposals for reorganisation have been received and the consultation has now closed. The Government are considering all the evidence submitted and will take decisions guided by the statutory criteria and what will best support effective and sustainable local government.

I turn to Oxfordshire. The Government have now launched a statutory consultation on proposals for unitary reform across the country, which closes this month. A range of options have been proposed, including a single county-wide authority, a two-unitary model and a three-unitary configuration, including a Greater Oxford council.

At this point, I note the remarks made by the hon. Member for Bicester and Woodstock (Calum Miller). He will appreciate that I cannot comment on the specifics, but he asked for a meeting on finance with me and my hon. Friend the Member for Banbury (Sean Woodcock), which I am very happy to arrange. Oxford is a vital cog in helping to grow our national economy, but that is exactly why the consultation and the process are so important. Decisions must be informed not only by structural and economic arguments made by local councils but by the views of residents, businesses and communities themselves.

Across all areas undergoing reform, the Government’s priority is that change must not come at the expense of vital decisions to keep building homes and delivering frontline services. We are also providing practical support to councils delivering reorganisation to help with this capacity, including up to £63 million nationally to help manage implementation pressures alongside expert advice from across the sector and the Local Government Association. I note the comments made by the hon. Member for Guildford (Zöe Franklin) about parish councils being responsible for their own services and so on. If she has particular concerns about that, I will welcome a note from her.

Reorganisation also sits alongside wider action to place local government on a stronger financial footing. Earlier this year, the Government confirmed the first multi-year local government finance settlement in a decade, which has been welcomed by Members from across the House because it provides councils with greater certainty and ensures that funding better reflects needs and deprivations.

We should remember that the benefits of strong unitary councils are not theoretical. For example, where they already exist, we are seeing results. In South Yorkshire, four unitary councils working with the mayor are helping places such as Barnsley and Doncaster not only to grow their local economies but to translate that into higher wages for local people. South Yorkshire is one of the places that has suffered worst with unemployment in our country’s history, but it is now making serious and significant progress. That is the real economic growth that improves living standards.

Newer unitary councils such as those in Buckinghamshire and North Yorkshire are delivering millions of pounds of efficiencies through streamlined structures that have reduced duplications, delivering savings that will be reinvested in frontline priorities such as supporting vulnerable children and funding local transport. The hon. Member for Woking made his point about vulnerable children very well; I will alert the Minister with responsibility for children’s care to his comments so that he can get a response.

[Zöe Franklin]

I want to return to the Minister’s point about how mayoral authorities are making such economic progress, and to my question. When foundation authorities are formed on the journey to reorganisation, they do not get the same funding support as a mayoral authority. They are therefore losing out on essential kick-starting resources to help them on their journeys to successful economic growth. Will she clarify what support is coming?

[Alison McGovern]

When my own area in Merseyside started off on the journey to get a mayor, it was really unclear how to build the right resources; the time it took to do that should not be underestimated. The Association of Greater Manchester Authorities started 20 years before the city had a mayor.

The right way is to get the foundation strong first: get the unitary authorities in place and then move forward from there. I know that the hon. Lady will have more conversations with my hon. Friend the Devolution Minister, who will talk to her about the specific process for Surrey. It is important to me, as Minister for Local Government, to get the foundations strong so that we can build devolution up in that way.

I recognise that Members have raised a number of specific concerns about the implications of reform in their own areas, and those concerns matter. They are being carefully considered. Whether the issue is financial sustainability, which we have discussed, local identity, which I went on about again, or the impact of potential boundary changes, decisions will be taken carefully, transparently and in the interests of residents.

Although they are out of scope of our reorganisation programme, town and parish councils will continue to play an important role in representing their communities. New unitary authorities will also be expected to develop strong, local, area-based working, so that decision making remains close to the communities that it affects. As we look ahead, the next steps are clear: the Government will move forward with decisions and continue working with councils across the region to ensure that change is delivered smoothly and responsibly.

In conclusion, local government reorganisation offers an opportunity for the south-east: an opportunity to give local areas the capacity to grow, build the homes their communities need and see better public services; an opportunity to replace complex and outdated structures with councils that are simpler, stronger and more accountable; and an opportunity to ensure that local government is fit for the future.

I thank the hon. Member for Surrey Heath again for securing this debate. I look forward to continuing to work with Members across the House and with local partners to make changes that will benefit communities right across the south-east.

15:55

[Dr Pinkerton]

I thank the Minister for the seriousness with which she has addressed many of the points raised today. I also thank everyone who has spoken; we had excellent interventions from my hon. Friends the Members for Epsom and Ewell (Helen Maguire) and for Mid Sussex (Alison Bennett), and from the hon. Member for Strangford (Jim Shannon).

The hon. Member for Crawley (Peter Lamb) gave a really excellent speech. Like me, he questioned the financial underpinnings and assumptions that sit underneath this process altogether. He also raised important points about urban-rural tension. I slightly agree with the right hon. Member for East Hampshire (Damian Hinds): I think the reorganisation will place greater pressure on rural communities than on urban ones, but we will see. The point is that nobody has certainty and there are fears in both directions.

My hon. Friend the Member for Bicester and Woodstock (Calum Miller) spoke powerfully about transitional funding arrangements, as did my hon. Friend the Member for Guildford (Zöe Franklin). My hon. Friend the Member for Woking (Mr Forster), my constituency neighbour, spoke knowledgeably and passionately about inherited debt—reckless borrowing from the past—but also about the important point of personal responsibility and indeed culpability. I would absolutely support him, and indeed the Minister, in taking that point still further forward.

Lastly, I thank the spokesperson for the Conservative party, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), as well as the Minister once again. Thank you all.

Question put and agreed to.

Resolved,

That this House has considered the impact of local government reorganisation in the South East.

15:57

Sitting suspended.