Extraordinary Council

Tuesday 18 March 2025

Title	Response to Government Invitation to Submit Interim Plan in Respect of Local Government Reorganisation in Surrey
Purpose of the report	To make a decision
Report Author	Daniel Mouawad, Chief Executive
Ward(s) Affected	All Wards
Exempt	No
Exemption Reason	Not Applicable
Corporate Priority	This item is not in the current list of Corporate Priorities but still requires a Council decision.
Recommendations	Council is asked to: approve the initial submission to MHCLG on behalf of the 12 Local Authorities of Surrey.
Reason for Recommendation	Local Authorities in Surrey have been invited to submit interim proposals for Local Government Reorganisation by the 21 March 2025 and a full proposal by 09 May 2025

Summary of the report

What is the situation	Why we want to do something
• On 16 December 2024 the Government published its English Devolution White Paper. This outlined a very clear ambition for every area in England to move towards setting a strategic authority led by an elected Mayor.	• Government has indicated via the White Paper published in December 2024 that it was seeking a new model for local government. Part of that new model is the reorganisation of the existing two-tier structure in Surrey. • The Council has been provided with an opportunity to submit, along with the other Surrey Councils, proposals as to what that new structure should look like.
This is what we want to do about it	These are the next steps
• The Council will consider the proposed initial submission to MHCLG and make a decision.	• Local Authorities are to submit interim proposals for Local Government Reorganisation by 21 March 2025 and a full proposal by 09 May 2025.

2. Key issues

1.1 On 16 December 2024 the Government published in its English Devolution White Paper a very clear ambition for every area in England to move towards setting up a strategic authority, led by an elected Mayor.

1.2 The Government also set a clear expectation that in two-tier areas, such as Surrey, local government be reorganised (LGR) with new unitary councils established to replace district, borough and county councils. It was explained that the intention was that this would be carried out in a phased way, taking into account where LGR could unlock devolution, where areas were keen to proceed at pace or where it could help address wider failings.

1.3 Where County Councils concluded that postponing their elections (due to be held in May 2025) would help the area to deliver both LGR and devolution to the most ambitious timeframe, they were invited to ask the Minister for Local Government and English Devolution to consider exercising his ministerial powers to lay the necessary legislation to postpone the elections.

1.4 Surrey County Council responded to this invitation and, while the leaders of all district and borough councils across Surrey raised objections, the Minister subsequently confirmed that he supported LGR across Surrey to the most ambitious timetable and that the forthcoming elections would not proceed

1.5 All leaders of local authorities across Surrey were invited to work together to develop a proposal for LGR and submit an Interim Plan by 21 March 2025, followed by a full plan by 9 May 2025. Working to this timetable would enable elections for shadow unitary councils to be held in May 2026, with unitary councils going live on 1 April 2027. The current county council and all 11 districts and boroughs would continue to operate until the go live date for the new unitary authorities.

1.6 This paper provides information on the guidance local authorities are expected to have regard to when formulating proposals and the criteria against which the Minister will assess them. It outlines the way in which local authorities across Surrey are working together to consider options and to prepare a single Interim Plan for consideration and agreement by all twelve authorities in time for submission to the Ministry of Housing, Communities and Local Government (MHCLG) by 21 March 2025.

A copy of the proposed Interim Plan is attached at Appendix A.

1.7 The Government has stated that LGR, whereby new unitary councils will replace county and district/borough councils in two-tier areas such as Surrey, will be more efficient and effective, in addition to improving customer satisfaction.

2. Report and, where applicable, options considered and recommended

2.1 On the 16 December 2024 the Government published its English Devolution White Paper. This outlined a very clear ambition for every area in England to move towards setting up a strategic authority, formed when two or more upper-tier authorities combine, led by an elected mayor. The White Paper outlined the powers and funding which could be devolved to such authorities, including those relating to transport, strategic planning, skills and employment, business support, environment and energy, health and public safety.

2.2 The Government also set a clear expectation that in two-tier areas, such as Surrey, local government be reorganised with new unitary councils established to replace district, borough and county councils. They stated that this would lead to better outcomes for residents, save significant money and improve accountability.

2.3 The White Paper explained that the Government intended to facilitate a phased programme of LGR for all two-tier areas, taking into account where this could unlock devolution, where areas were keen to proceed at pace or where it could help address wider failings.

2.3

2.4 As Surrey only has one upper-tier authority and neighbouring areas made it clear that their devolution ambitions did not include Surrey, LGR is essential in unlocking devolution and preventing Surrey from becoming a “devolution island.”

2.5 Following the publication of the White Paper, leaders of county councils received a letter from the Minister for Local Government and English Devolution. This noted a concern that the timing of the May 2025 elections could affect planning for devolution, particularly where this was happening alongside LGR. The Minister stated that, to help manage these demands, he was minded-to lay secondary legislation to postpone local council elections (County). However, it was made clear that this would only be done where it would help the area to deliver both LGR and devolution to the most ambitious timeframe. On 10 January 2025, Surrey County Council (SCC) submitted a request to the Minister asking that he exercise his ministerial powers to lay the necessary legislation to postpone the County Council elections in Surrey. It was explained that this would give time for the Leader of SCC to work with the Leaders of Surrey’s District and Borough Councils to put together proposals for local government reform that are necessary to unlock further devolution for Surrey.

2.6 In response, Leaders of the districts and boroughs jointly wrote to the Minister objecting to the proposal to cancel the elections, raising concerns about the pace of change and expressing a strong view that there is a need to allow time for widespread consultation.

2.7 On 5 February 2025, the Minister confirmed that he supported LGR across Surrey to the most ambitious timetable and that the forthcoming elections would not proceed. All leaders of local authorities across Surrey were invited to work together to develop a proposal for LGR.

2.8 Authorities across Surrey were asked to submit an Interim Plan by 21 March 2025 and a full plan by 9 May 2025. This is with a view to elections being held in May 2026, with new unitary councils going live on 1 April 2027. If this is assumed to be the most challenging timeframe. The current county council and all 11 districts and boroughs would continue to operate until vesting day to then naturally demise on the creation of the new unitary authorities.

2.8

2.9 The White Paper explained that new unitary councils must be the right size to achieve efficiencies, improve capacity and withstand financial shocks. It stated that for most areas this will mean creating councils with a population of 500,000 or more but recognised that there may be exceptions to ensure that new structures make sense for an area, including for devolution, and decisions will be on a case-by-case basis.

2.10 It was made clear in the White Paper that the delivery of high quality and sustainable public services to citizens and communities will be prioritised above all other issues. In addition, new councils are expected to take a proactive and innovative approach to neighbourhood involvement and community governance so that citizens are empowered.

2.10

2.11 It was recognised that all levels of local government have a part to play in bringing improved structures to their area through reorganisation, including by sharing information and working proactively to enable robust and sustainable options to be developed and considered. It was stated that there is an expectation that all councils in an area will work together to develop unitary proposals that are in the best interests of the whole area, rather than developing competing proposals. In addition, there is an expectation that all councils in an area will work with relevant government departments to bring about these changes as swiftly as possible.

2.11

2.12 Further guidance was provided in a letter from the Minister of Local Government and English Devolution to all council leaders across Surrey on 5 February 2025. This also outlined the criteria against which proposals will be assessed. A copy of the letter is attached at Appendix B.

2.12

2.13 The letter of 5 February 2025 identified the need for an Interim Plan to be provided to the MHCLG on or before 21 March 2025. The expectation is that this will set out the progress being made on developing proposals in line with the criteria and guidance contained within the letter. While it was recognised that the level of detail provided may vary from place to place, the expectation is that one Interim Plan is jointly submitted by all councils in the area. Guidance is clear that the Interim Plan may reference more than one proposal, if there is more than one option under consideration.

2.14 Surrey’s 12 Councils have been working together to explore the number and structure of potential unitary authorities and consider potential governance structures and geography involving a directly elected mayor, including partners beyond Surrey. They have been assisted in this work by the Chief Executives of the local authorities who have also been meeting together regularly. Section 151 Officers and Monitoring Officers have also met regularly.

2.15 In approaching this work, it was recognised that the option of a single unitary authority across Surrey could not be pursued as this would not unlock devolution. It was also acknowledged that any proposals for more than three unitary authorities across Surrey should not pursued due to their population size. It is our understanding that a single county unitary has been ruled out by the leaders of all twelve authorities in Surrey.

2.16 In shaping options, leaders identified the importance of drawing on the latest, most relevant data and insight. To enable this, data repositories have been set up so all councils are using consistent data and insights. This will help ensure that decisions are evidence based.

2.17 A copy of the Interim Plan for Surrey is attached at Appendix A (to follow). This consists of two parts:

· Part A sets out the joint challenges and opportunities facing residents and businesses across the county, and outlines how the county, district and Borough Councils are working together as Surrey progresses on its LGR and devolution journey. It also raises some key issues that authorities would welcome further discussion with government on to support the new arrangements to have the greatest chance.

· Part B begins to set out proposals for future unitary local government arrangements in Surrey, including the relative advantages and disadvantages of different options, approaches to implementation and engagement, and steps needed to finalise proposals by the Government’s deadline of 9 May 2025.

3. Policy Framework Implications

As Members will appreciate no local authority will adopt a policy designed to provide for its abolition. All the current policies adopted by the Council are geared towards enabling it to deliver the various functions allocated to it. In the event that reorganisation was to take place then the authority which replaces the Council will adopt new policies which will reflect its various functions, which will be greater than currently as it will be a unitary authority. Should reorganisation not take place then the Council will continue with its existing policies until they are reviewed in line with changes in legislation or case law.

4. Financial management comments

4.1 Preparing a proposal(s) for LGE in Surrey and transitioning towards it will have resource implications for all Local Authorities in Surrey. A key driver in Ministers’ decision making will be the financial implications and the Government will be looking for proposals which in the medium term deliver net financial benefits. Associate with the process there will be across Surry significant financial costs both prior to vesting day and post this date and in total these are likely to equate to several tens of millions of pounds to be shared between the outgoing and incoming authorities. It is likely that these costs will be financed by the Government allowing capitalisation of these costs to then enable them to be paid down over a period of time.

4.2 In order to evaluate the potential scale of costs and savings likely to be generated, two parallel models have been developed, one by Surrey County council and one by the Surrey Districts and Boroughs (Appendix B). Surrey Section 151 Officers have collaborated to seek to share assumptions and modelling. The two models are being refined and it is likely that they will over time move closer together, with more work required be the 09 May final submission. The Spelthorne Section 151 Officer has, within very tight timescales actively sought to verify the assumptions and analysis and is comfortable to say that the estimates have been made on the basis of data available at the time and that the conclusions and analysis are based on a robust evaluation and analysis of Surrey’s make-up, and have been discussed by all District and Borough Section 151 Officers and that there is broad agreement around most of the assumptions being made. At the time of writing this report, the financial assumptions are not consistently agreed across all Councils and need further refinement. The financial modelling is not fully complete, and the benefits and costs shown should be treated with caution, the figures are estimates and based on the best information available at the point of publication. The assumptions and financial modelling will continue to be refined in the comings days and as part of the development of the business case which will be presented to Government by 09 May 2025.

4.3 LGR will undoubtably have significant employment implications for staff across all councils in Surrey. Whilst the exact nature and scale of the employment implications are unclear at this stage, these will be considered in detail as part of any detailed proposal for LGR in Surrey.

5. Risk management comments

5.1 There is a risk that not all twelve authorities in Surrey will agree to submit the Interim Plan as attached at Appendix 2. This risk has been negated as far as possible by close working between Leaders and Chief Executives and by recognising that the Plan can reference more than one proposal, where there is more than one under consideration. The proposals contained within an Interim Plan are not binding on a Local Authority.

5.2 In the event that all twelve authorities are not able to agree a joint Interim Plan, MHCLG has accepted that there may be multiple submissions.

5.3 There is a risk that the Interim Plan may not provide detail on all the areas suggested by the guidance (contained within the letter at Appendix B). There is no prescribed content for the Interim Plan, and it is recognised that the level of detail provided may vary from area to area.

6. Procurement comments

6.1 Not applicable.

7. Legal comments

7.1 The English Devolution White Paper sets out an expectation that all two-tier areas such as Surrey will develop proposals for reorganisation.

7.2 In his letter to council leaders of 5 February 2025, the Minister for Local Government and English Devolution outlined that the Secretary of state for Housing, Communities and Local Government, in exercise of his powers under Part 1 of the Local Government and Public Involvement in Health Act 2007 (‘the 2007 Act’), invited any principal authority in the area of the county of Surrey, to submit a proposal for a single tier of local government.

7.3. This may be one of the following types of proposal as set out in the 2007 Act:

· Type A – a single tier of local authority covering the whole of the county

· Type B – a single tier of local authority covering an area that is currently a district, or two or more districts

· Type C – a single tier of local authority covering the whole of the county concerned, or one or more districts in the county; and one or more relevant adjoining areas

· Combined proposal – a proposal that consists of two or more Type B proposals, two or more Type C proposals, or one or more Type B proposals and one or more Type C proposals.

7.4 Proposals must be submitted in accordance with criteria set out in the Annex to the letter dated 5 February 2025, namely:

· Any proposal must be made by 09 May 2025.

· In responding to this invitation and authority must have regard to the guidance from the Secretary of State set out in the Schedule to letter of 05 February 2025 (Appendix B) and to any further guidance on responding to this invitation received from the Secretary of State.

· An authority responding to this invitation may either make its own proposal or make a proposal jointly with any of the other authorities invited to respond.

7.5 In support of that formal invitation, Local Authorities were asked to submit an Interim Plan on or before 21 March 2025, in line with guidance in the annexe attached to the letter of 05 February 2025 (Appendix B).

7.6 Following submission of the final plan (by 09 May 2025), should the Minister decide to implement any proposal, legislation will have to be greed by Parliament prior to moving to elections to new ‘shadow’ unitary authorities. At this stage it is envisaged that these elections would be held in May 2026.

7.7 A ‘shadow’ authority is one that is elected to carry out the functions of a new Unitary Council until that authority formally comes into effect. This is commonly called ‘vesting day’. At this stage it is envisaged that vesting day would be 01 April 2027. All existing councils across Surrey would continue to operate and deliver services until vesting day.

7.8 The legal powers to deliver Local Government reorganisation are contained in the Local Government and Public involvement in Health Act 2007. These powers have been used to deliver recent Local Government reorganisation.

8. Other considerations

8.1 Surrey County Council facilitated a briefing for partners on 25 February 2025. This provided information on devolution and reorganisation. Those present stressed the importance of working together to strengthen already strong working relationships and put forward their thoughts on the importance of community engagement, health and wellbeing and skills in this work. It was noted that, as we head toward the 09 May deadline for final proposals to be submitted, there is a need and enthusiasm for continued stakeholder engagement.

8.2 Regular communications have been sent out by Local Authorities across Surrey in order to ensure that residents and businesses are kept informed. Where possible, the communication is issued jointly. The Council has created an information page on devolution providing helpful links.

9. Equality and Diversity

9.1 Whilst there are no equality implications arising as a direct result of this report, the impact on vulnerable and protected characteristic groups will be an important consideration as proposals continue to be designed.

10. Sustainability/Climate Change Implications

10.1 There are no direct implications as a result of this report.

11. Timetable for implementation

11.1 The indicative timetable for this initiative is as follows:

· Submission of interim proposals – 21 March 2025

· Submission of full plans – 09 May 2025

· Decision by Government – Summer/Autumn 2025

· Legislation laid before Parliament – Winter 2025/Spring 2026

· Elections for shadow authority – May 2026

· New Unitary authority go live – April 2027

12. Contact

12.1 Chief Executive, Daniel Mouawad

DCM.CEX@spelthorne .gov.uk

Background papers:

· English Devolution Whitepaper

· SCC letter back to MHCLG – postpone of elections (NB: draft content that was taken to the Extraordinary SCC Council Meeting on 08 January 2025)