Local Government Finances: Surrey

Miatta Fahnbulleh Excerpts

Thursday 22nd January 2026 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Miatta Fahnbulleh)]

I thank the hon. Member for Runnymede and Weybridge (Dr Spencer) for opening this debate on the important topic of funding for local government in Surrey and for the thoughtful, constructive and eloquent way in which he made his remarks. I also thank him for acknowledging that we have inherited a very challenging context. I do not intend to do any party political back and forth, but the reality is that the inheritance was incredibly tough. We are working at pace to rectify that, in an impossible context for everyone involved.

We share the hon. Member’s view that local government is on the frontline of delivering services to the people of this country. It can do so only when central Government works with it in partnership to overcome the shared challenges that we face. Our local government reforms, including funding reforms and reorganisation, will enable local councils that are empowered to deliver local services and equipped to drive economic growth and to work in the interests of their communities. That is a shared goal and a shared priority, and we will work with anyone across any political party in order to deliver it.

I turn first to the local government finance settlement. I put it on the record that this is the most significant move yet to make English local government more sustainable. That is a core priority against the really tough backdrop that local authorities across the country are having to navigate. We are delivering fair funding, targeting more money to the areas that need it most and then putting in place multi-year settlements for the first time in a decade. That will give councils the certainty to make the longer-term calls so that they can take a more preventive approach and do less crisis management.

For the local authority in Surrey, by the end of the multi-year settlement period in 2028-29 the provisional settlement makes available almost £1.5 billion of core spending power—an increase, in totality, of 7.3% compared with 2024-25. We acknowledge that there has been a cut in the core grant but, as has been the case for the past decade and a half, we look at the totality of core spending power, and it is going up. That does not in any way negate the fact that it is a tough context for local government to have to operate in, having had to operate in a really tough context for the past decade. However, we are trying to give sufficient flexibility in the approach that we are taking to enable local authorities to weather that.

For the first time since 2013-14, the Government are updating the relative needs formula, which forms part of how local authorities’ funding allocation is calculated. That has involved using more up-to-date data, including the indices of multiple deprivation published in 2025, as part of our assessment of needs. We know that that is leading to a redistribution across the country that is tough for some authorities to absorb, but we think it only right and fair that we target more support to those authorities and communities that have huge levels of need and deprivation. I say that as an MP representing a London constituency. London is taking some of that hit, but we see that as fair across the country, because in the end what we care about is supporting the communities that need the most help.

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Taiwo Owatemi.)

[Miatta Fahnbulleh]

We are simplifying and consolidating 36 revenue funding streams worth over £56 billion over three years, which we hope will provide greater flexibility, stability and certainty for local authorities.

We recognise that funding reform is just one part of the story. That is why we are committed to simplifying local government by ending the two-tier system and establishing new single-tier unitary authorities. I think the end goal that Members across the House are trying to get to is consistent. There is common ground: we want authorities that are sustainable and strong and can deliver for constituents. The Secretary of State has decided, subject to parliamentary approval, that Surrey will move towards two unitary councils: east Surrey and west Surrey.

The question of debt was raised, and rightly so. We are very alive to the pressure facing the new unitaries because of the historical debt. As the hon. Member for Runnymede and Weybridge says, we have announced an unprecedented commitment to repay, in principle, £500 million of Woking borough council’s debt in 2026-27. That is the first tranche of support, and we will continue to explore what further debt support is required and how we can work with the new west Surrey authority to resolve the debt issue. We are clear that residents are at the heart of this, and it is our collective responsibility to ensure that we are delivering for them. We are committed to working together to make sure that they are protected and have the quality and level of services that they deserve.

[Gregory Stafford]

From what the Minister says, it sounds as if she accepts that the remaining debt is still unsustainable to be dealt with at a local level. Is she teasing us with a future announcement of further moneys, or is it more of a general ambition?

[Miatta Fahnbulleh]

I would do no such thing as tease with announcements that sit with the Chancellor. What we have said to partners on the ground in the local authority is that this is a shared problem and we are committed to working together to find a resolution. We understand the pressure that the historical debt will place on the new authorities. It is incumbent on all of us to find a way through that ensures that, on the other side of it, we have local authorities that are sustainable, can survive and can deliver the quality of services for the local residents that is required.

[Dr Ben Spencer]

I think the Minister said a moment ago that she would work with the west Surrey authority to resolve the issue. At what stage in the process does she anticipate a decision and resolution? The west Surrey authority will not be an operational statutory unit until spring next year. We have elections to the shadow authorities this year. As I understand it, those shadow authorities will not have any powers until vesting day, when they are transferred to the full-fat authority, so the current county council and the district and borough councils will still have statutory powers.

Is the Minister saying that there will be no debt resolution until the west Surrey unitary authority is set up? Is she saying that there will be a resolution when the shadow authority is in place, or will we have a resolution before the elections this May? That is really important for our residents, who need to know what set-up the councillors they are voting for will have to deal with. Can she guarantee, or even say that it is her ambition, that she will get this resolved before we get to those elections?

[Miatta Fahnbulleh]

We are already working with all the authorities involved. That is why we put in place £500 million for Woking local authority. We have been working with it historically, and we will continue working with it to resolve this. I cannot give a timeframe, in part because resolving this requires all parties involved to come together to understand the scale of the problem and, critically, how we can work together, using the levers available to us. I hope that the hon. Gentleman hears that there is a shared commitment to resolving this, and we will work with the constituent local authorities to get a resolution.

[Dr Pinkerton]

Will the Minister give way?

[Miatta Fahnbulleh]

I will make a little progress, if I may. I acknowledge the pressure that social care is creating for the local government finance system; that is squeezing vital services. The hon. Member for Runnymede and Weybridge mentioned planning, but we see this issue across services that are not non-statutory. Ultimately, the core thing that local government can deliver is effective services that build our communities and hold them together, and we all want to preserve that. That is why we are driving through pretty punchy reforms across children’s social care, for example. That is the biggest transformation in a generation; there will be an historic £2.4 billion of investment over the multi-year settlement period in the Families First partnership programmes. We are building a national care service based on quality care, backed by £4.6 billion of additional funding available for adult social care in 2028-29, compared with 2025-26.

We will bring forward a full White Paper on special educational needs and disabilities, because we understand that there is pressure, and the impact that has on local government finances. We must find a way to deliver the best possible services for children and families who need support, and must do so in a sustainable way.

[Dr Pinkerton]

I am terribly grateful to the hon. Lady for giving way. She has been extremely open in her responses so far. One side effect of the financial pressures that Surrey faces as a consequence of special educational needs is the so-called safety valve agreement. That has had consequences for a proposed school in my constituency, Frimley Oak Academy, for which money is designated. The Department for Education agrees that it should go ahead, but as a result of the safety valve agreement, Surrey cannot go ahead with it, because of that school’s ongoing operational costs. That is an example of financial constriction having a material effect on the provision of a vital educational offering. Will the Minister perhaps take that point away, and inquire whether the situation could be freed up to ensure that the school can come to my constituency?

[Miatta Fahnbulleh]

I am happy to take that point away, and either my Department or the DFE will write back and provide an answer to the hon. Gentleman.

Let me address the question about devolution and the devolution process, and the move towards a mayor. We are absolutely committed to devolution. I have spoken to the leader of Surrey council and made it clear that we want to move forward. For us, the first step is creating a strong strategic authority that is empowered to start driving economic change and can bring constituent authorities together for strategic decision making. We want to move forward with that at pace, so we will work with the new unitaries, and with partners on the ground, to build a strong economic footprint, and build the institution that allows us to move to the next stage of devolution.

[Gregory Stafford]

The Minister is being extraordinarily generous with her time, but I do not want her to miss the opportunity to respond to the important question raised by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) about a Surrey mayor. Will she confirm whether we will get a mayor in Surrey before the end of this parliamentary term?

[Miatta Fahnbulleh]

Ultimately, that will be a local question. The process is always to put in place a combined authority first and foremost, and to get that working. The big lesson that I have learned from my many years working in the space of devolution—a lesson that we see when we look across the Greater Manchester combined authority—is that if we first get strong institution working in partnership, so that the combined authority can hold power and deliver economic development functions, it makes the mayor far stronger and more effective.

The first stage for us is working with the constituent authorities to move forward with the strategic authority. We want to do that at pace, and to ensure that we are equipping it with the powers that it needs, so that it can start driving economic prosperity for the area, take on strategic planning powers and transport powers, and start investing in the local community. We can then move through the stages of devolution. The commitment to devolution in Surrey is absolutely there, and we will work with partners to deliver that.

I thank all hon. Members for the powerful points that they have raised, and for their passion, commitment and advocacy for Surrey. I hope that they have heard, in this debate, that the Government are absolutely committed to fixing the foundations of local government finance, against an incredibly difficult backdrop. We are ready to listen to the concerns of any local authority about the ongoing reforms. We know that they are difficult and punchy, but we are making the reforms because we think that they are necessary if we are to get local government back on a sustainable footing. We are determined to work together, across party lines, to deliver our shared goal of services that work for constituents in every part of this country. The Government are absolutely committed to that.

Question put and agreed to.

5.10 pm

House adjourned.