Local Government Reorganisation: South-east

Al Pinkerton Excerpts

Tuesday 10th March 2026 Westminster Hall

[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—]

--- Later in debate ---

[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.