Major service reductions are coming to Surrey Heath due to a significant budget shortfall and dwindling reserves.
The council owes a lot. Loans paid for Camberley Square and House of Fraser. Debt payments almost equal tax income. Town hall sale plans are paused, and local government restructure may happen soon.
Reserves are running out fast and services are being cut deeply. The council risks going broke. They plan £2.143 million in savings and will use £21.67 million from reserves, which happened on February 19.
Finances were unclear for years, but audits are now done since 2019. They better understand reserves and know the budget deficit’s size.
The situation is bad and major savings are needed. They need more income to stay solvent in four years. They used reserves before for services, but that approach won’t work forever.
Past savings were not enough; they only bought time to use reserves. They are starting a big transformation program.
They review all services fully and restructure resident services. Services get reduced to minimum levels, and they will charge for some services.
Staffing will get reviewed too, as staff costs are most of service costs. The council may sell assets, and they already identified some assets.
Their biggest assets cause problems, because they are worth less than they paid. Selling them causes huge losses.
Council Leader Shaun Macdonald said it is “not pretty.” Reserves got misstated by £16 million, and services will change for residents.
Core income is £13 million, while core service cost is £15.8 million. This leaves a £2.8 million difference.
Indirect costs add £5.3 million, including interest and debt payments. These debts resulted from purchases in 2016 and impact future generations.
The council has two options now: reduce costs or increase income more. Income increases are very limited, with council tax increasing by 2.99 percent.
Cost cutting must happen, needing efficiencies and change. This is difficult to achieve, and they must stop doing some things. If it is not essential they cannot continue the service.
This is hard for everyone. It is hard on the council, hard on the officers, and challenges residents who value support.