Principle 5 – Secures financial efficiency, resilience and the ability to withstand financial shocks

Councillor numbers and governance

Maintaining and improving local democratic representation is crucial in maximising the benefits of reorganisation and devolution. Government’s aspirations for devolution are rooted in letting communities take back control from Westminster, and empowering elected Members to shape decisions affecting their local community. A move to unitary local government would create clearer lines of accountability, allowing residents, businesses and stakeholders to clearly understand who is accountable for service delivery in each new council area.

As noted earlier, there are currently 534 elected councillors in Surrey, with 81 at the county and 453 across the districts and boroughs. Many of these are ‘double hatters’ meaning they are both district and county councillors, though often not of coterminous areas. We have identified that reorganisation could reduce councillor numbers to 243 under both a two- and three-unitary model.

As also noted earlier, Surrey County Council underwent a boundary review in 2024. Given the recency of this review, and the need to move at pace to enable LGR, we are not proposing that the county’s divisions or electoral boundaries be reviewed. These boundaries are also contiguous with districts as the building blocks of the new authorities.

To reflect the increased responsibility of the new councils, and the demands upon its members, it is expected there would be up to three members per division. This would also ensure that the ratio of members to electors is in line with Boundary Commission guidance and the ratios of existing authorities of a similar size. Two members per division could also be considered. The ratio of electors per councillor would be around 5,500. This would be higher than most other councils of a similar size and, in rural areas especially, councillors would need to cover large geographical areas, increasing their workload and diluting their ability to act effectively as the democratically elected leaders within their community.

Effective local representation, governance and decision making will also be supported by the presence of town and parish councils across much of Surrey. There is also the opportunity to carry out community governance reviews to enhance local democracy and representation in areas that do not already have these arrangements in place.

Members’ allowances

The current cost of members allowances within Surrey mainly consists of Basic Allowances and Special Responsibility Allowances.

The current cost of basic allowances is around £3.8m per annum with the allowance much higher for Surrey County Council than for the districts. This has been benchmarked against the 10 closest existing unitary councils and an average sum has been estimated for the new council of £14,250 per councillor. Based upon a reduction from £3.8m for the existing 534 elected councillors to 243, this would give a saving of £337,250 per annum compared to current costs.

Special Responsibility Allowances (SRAs) are paid to councillors who have a higher than average workload and/or hold particular positions of responsibility within the council such as the Leader or committee chairs.

The cost of these within the existing Surrey Councils is £1.467m per annum. Benchmarking against the 10 closest existing unitary councils suggests an average cost of around £380k per annum within a similar sized unitary. This would translate into savings compared to the current costs in either the two- or three unitary models.

Elections

There is also an opportunity to streamline the electoral process in Surrey as part of local government reorganisation. This would result in efficiency savings and, alongside changes to councillor numbers, support local democratic accountability through simplifying electoral structures.

The current electoral cycle in Surrey sees a mix of authorities electing in thirds as well as those that hold all-out elections. Our figures assume that the new unitary authorities would elect on an all-out basis which is in-line with Best Value guidance.  This would reduce the overall cost of elections by two thirds, saving almost £7m over the course of a four-year cycle.

While it would be most efficient for elections for the directly elected Mayor to take place at the same time as those for the new unitary authorities, this is not currently anticipated in the timescales shared by government. There are savings to be achieved from moving the current system of county and district elections, where some elected in thirds and some have all out-elections every four years. Whatever setup of unitary councils is established, the size of electorate and poll locations are unlikely to change. The estimated costs of holding an election for each unitary have been updated to allow for slightly higher costs in multiple areas such as for additional returning officers although this is still not deemed to be a significant issue.

Estimated cost of elections

Extra council tax yield

Districts and Borough Councils can only increase council tax by their referendum limit of 2.99%. Their element of the precept would become part of the new council precept to which the unitary cap of 4.99% could be applied, as long as the social care precept could be justified. With increasing social care costs, this is deemed a safe assumption and has been kept in the financial model.

The benefit would occur every year and compound on the previous benefit. This has now been included in the model.

Reduced duplication

The biggest saving from local government reorganisation will come from bringing 12 councils together. In addition to savings set out above, additional savings relate particularly to reductions in back-office functions – such as finance, legal, governance, HR, procurement – needed to support fewer councils, and other areas such as contact centres.

From experience elsewhere it is accepted that these savings tend to be delivered in two distinct phases. Firstly, some immediate savings as vacancies and temps are removed and some staff retirements agreed. The second phase comes through transformation whereby new services are formed from fundamental reviews of the existing ones. This is considered under the transformation section later in this document.

Prudent assumptions have been used for the value of initial savings which could be delivered, reflecting what has been delivered through similar LGR processes, compared to the original business case assumptions.

The budgets for each council have been thoroughly reviewed and broken down between customer support, service provision and enabling services. An allowance has then been calculated for a portion of the district and borough costs, with areas such as debt-servicing costs and benefit payments excluded, as to what could be delivered in the initial transition stage. A small allowance has been added for savings which could be generated as the back-office functions from the districts and boroughs come together with the back office of the county council. These savings have been scaled depending upon the number of new councils being formed.