Why is Spelthorne council facing problems?

A report raised a number of concerns at the authority, including that it was in more than £1bn of debt

As a Surrey council faces having its services overseen by government-appointed commissioners, BBC Surrey political reporter Jack Fiehn looks at how it got into this situation.

A report into governance at Spelthorne Borough Council raised a number of concerns about the authority, including that it was in more than £1bn of debt.

There were other concerns too - that it had a culture of being isolated, over-optimistic, and had poor record of addressing previous recommendations.

The leader of Spelthorne council, Joanne Sexton, said the authority had "agreed to work in partnership to take decisive action". But how did it get to this stage?

Why is the council in so much debt?

A lot of it is due to the amount of money Spelthorne borrowed to invest in properties.

Between 2016 and 2018, the council built up a portfolio funded entirely from government loans.

Acquisitions have included a BP research centre and BP headquarters, office blocks and a development in Hammersmith.

Councillors had argued that the revenue from the investments was needed to make up for cuts in funding from central government.

Spelthorne's debt was estimated to be £1.1bn in March 2023.

It is the second highest level of debt for a district or borough council in England, after Woking.

What have inspectors said?

Best value inspectors were called in to review the council's finances in May 2024.

In their report, they say Spelthorne "is in a critical financial position, burdened by unsustainable debt levels, significant investment risks, and systemic governance weaknesses".

Spelthorne Borough Council's acquisitions included a BP research centre at Sunbury

The council had had short term views of the property market and an "overly optimistic expectation" of how it would perform in the future.

The approach to property acquisitions "lacked due regard to long-term planning and risk management", papers added.

There is also concern that properties have reduced in value since they were bought.

Will there need to be cuts to services?

The council has said that there will need to be £8.6m in savings by 2028/29.

The inspectors say they have not seen "realistic plans" to deliver those and that the situation is "even more critical."

Papers in the report also note: "The council's use of its resources is inadequate", and that "the combination of voids (empty properties), expiring leases, and falling income streams from the investment portfolio threatens the stability of its budget."

Woking Borough Council, which effectively declared itself bankrupt in 2023, made £8.4m in cuts last year.

That led to cuts including the closure and merger of centres for the community and day care facilities, public toilets being shut, job losses at the council and other services being scaled back.

What has the council had to say?

Spelthorne says it understands the seriousness of the recommendations of the report.

Leader of Spelthorne Borough Council, Joanne Sexton, said: "This Group Administration has faced a challenging time and has been actively pursuing the right solution to manage the historical debt that it has inherited.

"We have met with the local government minister from central government, and we have agreed to work in partnership to take decisive action in the remaining time we have before local government reorganisation is implemented."

With additional reporting from local democracy reporters Emily Dalton and Chris Caulfield.