Council to slash spending as debts mount

If successful, a series of planned financial measures and sales could help slash Spelthorne Borough Council's debt by about £360m

A Surrey council has warned that it needs to slash £11m from its annual spending bill – more than it generates in council tax – or risk effective bankruptcy.

A report into governance at Spelthorne Borough Council released earlier this year confirmed that the authority is in more than £1bn of debt.

On Tuesday the council's corporate policy and resources committee agreed a set of measures which could help slash its debt by about £360m.

Terry Collier, the council's chief financial officer (CFO) warned that a section 114 notice - an emergency halt on expenditure in order to balance the budget - could become inevitable, according to the Local Democracy Reporting Service.

These notices are issued when it is determined that a council is about to incur unlawful spending, and cannot effectively pay its own bills.

Mr Collier said the council needed to make changes after implementing a minimum repayment plan.

"We need to refinance in order to secure a repayment discount to help ease that pressure," he said.

"Otherwise the council would have no choice but to seek exceptional financial support and potentially that would push myself as CFO to issue a Section 114 notice, putting an emergency halt on expenditure in order to balance the 2026/27 budget."

The council said these measures aimed to facilitate early repayments to the Public Works Loans Board, the same borrowing body used by the bankrupt Woking Borough Council.

The potential £360m savings are allowed to be spread over 10 years, creating an annual net gain of £36m a year.

However, this is heavily offset by the need to start repaying debts now estimated to start costing £40m a year.

When added to the new interest payments of £7m a year, it leaves the council having to find £11m a year in cuts or savings.

Earlier this year it said there would need to be £8.6m in savings by 2028/29.

Council leader Joanne Sexton said the administration was "taking decisive action".

"These are tough but necessary steps to protect local services and secure the borough's long-term future," she said.

The plans will go before full council on Monday.