Surrey County Council warns of major financial risk if new UK government tax equalisation plan is adopted, potentially forcing deep service cuts or crisis measures.
Surrey Leader Issues Stark Warning Over Tax Reforms
Surrey County Council could face a financial crisis if proposed central government reforms to local authority funding move forward, warned council leader Cllr Tim Oliver during a cabinet meeting on July 22. The reforms aim to replace the current council tax model with a 100% equalisation system, which could dramatically slash Surrey’s income and push the council toward insolvency.
Why the New Funding Plan Could Hurt Surrey Most
The UK government’s Fair Funding Review proposes distributing the same level of council tax funding to all local authorities, regardless of the value or quantity of homes in their jurisdiction. Surrey, which has a disproportionately high number of high-band properties—such as Band H homes that pay over £3,600 in annual taxes—stands to lose the advantage of its higher local tax base.
Income Drop Could Lead to Service Cuts or Section 114
Cllr Oliver warned that the resulting income drop cannot be compensated even by the maximum 5% council tax hike allowed. “There is an expectation we will look to our residents to fill that gap,” he said. “That gap won’t be filled—can’t be filled.” He also raised the spectre of Surrey issuing a Section 114 notice, which would legally prevent the council from spending beyond its statutory obligations, effectively freezing all non-essential services.
Council Pushes for Efficiency While Lobbying Government
Despite the looming threat, Oliver affirmed the council’s determination to avoid collapse. “It’s absolutely essential that we drive efficiencies wherever possible,” he said, adding that Surrey would continue lobbying the government for fairer treatment and would manage its budget with caution and discipline. “We are doing everything in our power to continue providing vital services,” he added.
National Government Says Reform Is Long Overdue
While local leaders like Oliver criticize the reform’s potential impact on affluent areas, government ministers maintain the current system is outdated and unfair. Council tax bands are still based on 1991 property values, and many rural or lower-income regions struggle to raise adequate local funds. A government statement said the new model would better account for community needs, geographic challenges, and business rate income, aiming to create a “fairer and more modern” funding structure.
No official date has been set for implementing the proposed funding changes. However, local councils like Surrey are already preparing for potential budgetary constraints. The coming months are likely to see increased lobbying efforts from wealthier authorities and further debate about how best to balance equity in public funding with financial sustainability.
