Spelthorne annual spending budget set to be cut
Financially distressed Spelthorne Borough Council has “no choice” but to slash £11million from its annual spending bill – more than the amount it takes in each year in Council Tax – or risk effective bankruptcy.
The stark outlook was laid bare by the borough’s chief financial officer as he outlined plans to start servicing debt properly, reschedule repayments, and hire outside expertise to help offload some of its assets to bring its approximately £1.1 billion black hole under control.
The council is set to launch a series of financial measures and sales that would allow it to make early repayments to the Public Works Loans Board – the same body bust Woking Borough Council borrowed from.
If successful, it could help slash Spelthorne Borough Council debt by about £360million. The savings generated are allowed to be spread over 10 years creating an annual net gain of £36m a year.
However, this is heavily offset by the need to start serving its debt repayments correctly – now estimated to start costing £40m a year.
When added to the new interest payments of £7m a year, it leaves the borough having to find £11m a year in cuts or savings.
To give an idea of the size of the cuts it’s facing, it brings in about £9.5m through Council Tax.
The plan was agreed by the borough’s corporate policy and resources committee on Tuesday, November 11 and will now go to full council on Monday November 17 for final approval.
Terry Collier is the borough’s chief financial officer. He said: “The reality is that the council has no choice but to implement a minimum repayment plan (MRP).
“By addressing that requirement that pushes up the MRP charged to revenue budget very significantly, so we need to refinance in order to secure a repayment discount to help ease that pressure.
“Otherwise the council would have no choice but to seek exceptional financial support and potentially that would push myself as CFO to issue Section 114 notice putting an emergency halt on expenditure in order to balance the 2026/27 budget.”
Local authorities cannot, by law, go bankrupt. Instead, they issue what is known as a section 114 notice, whereby council’s finance officer states that the authority is about to incur unlawful spending – effectively it can’t pay its own bills.
Refinancing is expected to start before the full council decision, such is the urgency of Spelthorne’s situation.
Mr Collier added: “In turn the council needs to start selling its assets, but is seeking to bring in outside expertise so as to avoid a fire sale.
“We will differentiate between investment assets which as a result of the increase of MRP will cease to be making a positive contribution to the budget and regeneration assets.”
Following the meeting the council issued a statement saying it was taking “firm action to secure a stable and sustainable financial future”.
Earlier in 2025 the council was put on Best Value notice by the government that forced it to prove its finances were affordable and sustainable.
The council said its current financial challenges “stem from decisions made by previous administrations which led to high levels of borrowing and financial risk” and that its “new strategy aims to correct those issues and bring the Council’s finances back in line with national accounting standards”,
These changes, it said, will mark a turning turning point and that, over time, the goal is to reduce total debt to be more in line with other councils at around the £100 million mark.
Council Leader Cllr Joanne Sexton said: “This administration is taking decisive action to fix the mistakes of the past Conservative administrations to make sure Spelthorne’s finances are sustainable, transparent, and compliant with national standards.
“These are tough but necessary steps to protect local services and secure the borough’s long-term future.
“As discussions continue around the future of local government in Surrey, we are determined to put Spelthorne in the strongest possible financial position.”