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After divisive 15% council tax rise plans, Surrey underspends by £7m

The local authority that had planned to hike its council tax by an enormous 15% in order to fight against social care cuts – in a move that has since raised suspicions of a “sweetheart deal” with the DCLG – has underspent its total budget by almost £7m, Cabinet papers have revealed.

Earlier this year, Surrey County Council revealed a highly controversial plan to raise council tax far beyond the acceptable 3.99% as a way to mitigate what it perceived to be a “dilemma in terms of budget”.

It quickly abandoned these plans in an eleventh-hour climbdown, with leader Cllr David Hodge claiming that the government “had listened” and “now understands” their concerns. He added that the authority was therefore “willing to take a risk that a solution will soon be found to the issues that all councils face”.

Private letters between the county council and Whitehall later revealed possible collusion between the two bodies, with Surrey, which remains a Conservative stronghold after last week’s elections, allegedly being offered a secret deal of extra cash in return for dropping its tax referendum – although it firmly denied these claims.

But in stark contrast to this apparently desperate push for extra money, board papers from the county council’s latest Cabinet meeting have revealed that as of 28 February, “measures taken by the chief executive and the director of finance” resulted in an underspend of £6.8m, rather than the predicted £22.4m overspend.

Surrey, which recently gave notice to withdraw membership from the LGA and the CCN, attributed this to “effective measures to bring the 2016-17 budget back into balance”, including one-off savings and spending delays “as well as genuine efficiencies such as achieving future years’ savings early”.

From September 2016, at which point the county council was forecasting a £22.4m overspend, up until the end of February, its Cabinet also “avoided further spending commitments, wherever possible, pending assurances of a balanced 2017-18 budget and a sustainable medium-term financial plan”.

This marks the seventh year in a row where the council maintained its net spending within the annual budget.

But the one-off measures taken to mitigate budget concerns “do not address the fundamental issue of service overspend, particularly in social care”, warned Cllr Hodge.

“These overspends are driven by: the increased numbers of those who need services, the increased complexity of their needs and the increasing costs of meeting those needs,” he added.

“That mix, plus the savings already achieved and the continuing reduction in central government funding make the council’s longer-term financial resilience a serious challenge.”