Corporate, Finance

Surrey takes stand to save county from financial black hole

Surrey County Council is set to take a stand and save the county from a financial black hole by declining the Coalition’s council tax freeze.

The council’s Cabinet is set to discuss proposing the authority reject the Government’s freeze because it would lead to a £70m financial black hole over five years. The sum is equivalent to wiping out Surrey’s road maintenance budget for more than two years.

The Government has offered all councils a one-off grant of 2.5% for 2012/13 if they freeze council tax for another year*. But it means that Surrey would be £14m down in every subsequent year when the one-year grant ends.

Council leader David Hodge said: “For some councils, it is a good offer but it’s not right for Surrey. The freeze would be a short-term gain for long-term pain.


“It would create a financial black hole of £70m in just five years, equivalent to wiping out Surrey’s road maintenance budget for more than two years.

“This isn’t about us wanting to spend more money, we’ve already made huge savings from our budget**. Our plans mean that even in 2017 we won’t be spending any more than we did in 2010. The truth is that we have to increase council tax every year just to stand still, because our Whitehall grant is reducing every year.

“If these proposals are agreed it will mean that amongst other things we’ll be able to increase spending on local road maintenance schemes by more than 100%***, despite some incredibly difficult financial challenges.

“With the number of people aged over 85 doubling in the next 20 years, some of the most heavily used roads in the UK and almost a 20% increase in the county’s birth rate over the past decade, Surrey faces enormous pressure on its budgets for elderly care, roads maintenance and school places.

“With these kinds of challenges it’s vital we make decisions in the long term interest of Surrey and we therefore have no choice but to recommend the council decline the Government’s offer.”

At its meeting on Tuesday 31 January Surrey’s Cabinet will consider a proposal to increase council tax by 2.99% in April. This would be below the current rate of inflation, which was 4.8% in November (rate according to Consumer Price Index).

The Cabinet’s recommendation will go forward to a meeting of Surrey’s Full Council on Tuesday 7 February where a final decision will be taken.

Ends

Media requiring more information should contact Paul Marinko in the Surrey County Council media team on 020 8541 9548.

Notes to editors:

* The Government provided a grant of 2.5% to local authorities that froze council tax for the current financial year (2011-12) and has extended the offer for the coming year. Surrey County Council accepted the offer for 2011-12 because the support funding from central government to manage the freeze lasted for a number of years to cushion the impact.

** Surrey County Council has saved £130m over the past two years and is on course to save £330m by 2016. The council also receives the lowest government formula grant of any county council in England.

*** Amongst other things, the funds raised from the 2.99% council tax rise have been earmarked to increase spending on local road maintenance schemes by more than 100%. It will mean that each local committee will see its annual budget for road maintenance projects increase.

A 2.99% increase in council tax would mean an extra 64 pence a week or £33.38 a year on a Band D property in Surrey.

Surrey County Council annual expenditure is £1.7bn. The revenue budget for roads maintenance accounts for £30m of the Surrey County Council budget every year.

Every year around £250m of the business rates Surrey collects is taken from the county to give to other parts of the country.

Surrey contributes £6bn net to the Treasury every year but still receives the lowest grant of any county council in the country.

Read a transcript of David Hodge’s announcement here

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