Minister writes to Surrey councils over high levels of 'risky' debt

A minister has written to three borough councils in Surrey about their "very high levels of debt" and "commercial investments".

Kemi Badenoch sent letters to Runnymede, Spelthorne and Woking saying the government is worried some councils are "putting taxpayers' money at risk".

She said the concerns were due to "disproportionate levels of debt".

Proposed new powers would allow the secretary of state to take "action directly", if there are concerns.

In her letter, Ms Badenoch, minister of state for equalities and levelling up, said the concerns were due to "disproportionate levels of debt, over-reliance on commercial income or pursuing novel and risky investments".

She said the three councils were "likely to fall within the scope" of the proposed new powers under the Levelling Up and Regeneration Bill, and called for discussions with her officials to agree what action might need to be taken.

Since 2016, Spelthorne's acquisitions have included a BP research centre and BP headquarters for £385 million and three office blocks bought for £285 million.

A House of Commons Public Accounts Committee published a report into council spending in July 2020, which said that borrowing had been "excessive".

Spelthorne says the income generated by the assets more than comfortably covered their annual financing and it did not believe the council was at risk of not being able to cover debt repayments.

Meanwhile, Woking, which has borrowed for its £700m Victoria Square development, has the highest level of commercial debt of any authority relative to its size, according to the Local Democracy Reporting Service.

Chief executive, Julie Fisher, said the council was "working with the Department for Levelling Up, Housing and Communities to assist them in understanding our local borrowing and investment practices".

A spokesman for Runnymede said there was "no hint of any action" being taken against the council.

He said: "We are content that we have a portfolio of investments that are working well for our residents and which have enabled us to deliver nearly £200m of regeneration through the Addlestone One development, Magna Square and the Egham Orbit Leisure Centre."

All three councils say there have been "early" discussions with the government.

A Department for Levelling Up, Housing and Communities spokesman said: "Taxpayers expect us to take action to stop councils from building up excessive debt.

"We will continue to engage with the sector to make sure they are supported."

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