Surrey County Council could follow Northamptonshire and become another local authority to face a similar financial crisis, research by the Bureau suggests.

The council is £25m adrift from its target for spending cuts in this financial year. It also faces a £105m gap over the next year - the equivalent of over 12% of its current budget. The reserves (that councils usually keep as a last resort) have halved in the last five years.

These problems are among the signs of severe financial stress demonstrated by Northamptonshire before it became the first council in 18 years to ban almost all new spending after being unable to balance its budget. The Bureau has identified five key issues (see below) that caused Northamptonshire’s financial crisis and compared them against the financial records of every council in England.

Surrey, which provides services to almost 1.2 million people, has at least four of the problems that experts had previously raised about Northamptonshire.

On Tuesday night Surrey approved a budget taking £23.6m out of its reserves to plug the gap in its finances. That’s despite being warned by the Chartered Institute of Public Finance and Accountancy (CIPFA), an industry body, that its reliance on such short-term measures is “unsustainable”.

“The Bureau’s research should send shivers down the spines of ministers because they know this is a crisis in part caused by their actions”, said Andrew Gwynne, MP for Denton and Reddish, Labour’s shadow secretary of state for Communities and Local Government.

He added: “The government cannot ignore these warnings and stand by and let another council collapse.”

The Bureau’s findings are part of a four-month investigation into local government finances. During the project, we found local authorities under acute financial pressure, caused primarily by large cuts in central government funding as well as a sharp rise in demand for services, such as social care for children and adults.

Surrey is represented in Parliament by a host of senior government ministers including the Chancellor Philip Hammond MP, Secretary of State for Environment Michael Gove MP, and Secretary of State for Health and Social Care Jeremy Hunt MP. The Bureau reached out to all those ministers about the cuts their constituents are facing, but received no comment.

