Government withdraws debt warning for Surrey council, but concerns persist

The government has withdrawn a warning previously issued to a Surrey council regarding its debt levels. Runnymede Borough Council (RBC) had accumulated approximately £600m in debt, which was roughly 71 times its core spending power. This situation prompted the government to issue a Best Value Notice to the council last year. The government expressed satisfaction with the actions taken by the authority but stated it remained concerned about the “significant” debt and the associated risk. RBC stated its intention to continue providing assurances to ministers regarding its delivery of local services and its debt management. Funds are borrowed through long-term agreements from the Public Works Loans Board. However, a risk arises if a council becomes unable to meet its debt repayments, effectively leading to insolvency, as occurred in the adjacent area of Woking. According to the Local Democracy Reporting Service, the funds borrowed by RBC were allocated to regeneration projects and to finance its own companies, with the aim of utilizing profits to cover services it would otherwise be unable to afford. The government chose not to prolong the notice after the local authority implemented measures, including close collaboration with Whitehall, to enhance its management of commercial assets and overall debt. The council has initiated the sale of portions of its property portfolio and has outlined a long-term requirement to review its more substantial assets. In a letter addressed to RBC’s chief executive, Suzanne Clarke, the deputy director of local government finance stated: “Based on the available evidence, ministers are reassured as to Runnymede Borough Council’s capacity to comply with its Best Value Duty.” The letter continued: “Whilst we are not renewing the notice, the department remains concerned about the significant debt held by the council and the risk this carries.” It concluded: “We expect the council to continue taking steps to reduce and manage its overall debt.” In a statement, the council declared: “Lifting the notice is testament to the transparent and open approach we have taken with civil servants in our response to the notice and evidencing our continuous improvement to reassure ministers about the way we operate to deliver local services and manage our commercial assets and overall debt.”