South West Devon MP seeks clarity on council funds in reorganisation plans

Rebecca Smith MP has raised concerns about how council surpluses could be handled under proposed local government reorganisation (LGR) plans, saying there is still a lack of clarity from the Government.

The MP for South West Devon said she has been contacted by local residents and council leaders worried that money held by district councils could be lost if new unitary authorities are created.

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Ms Smith previously submitted a written parliamentary question asking the Secretary of State for Housing, Communities and Local Government how surplus funds held by district councils, including West Devon Borough Council and South Hams District Council, would be treated if they were merged into a new authority. 

She also asked whether those surpluses could be used to offset debts held by other councils.

In its response, the department said assets and liabilities are expected to remain locally managed and that councils should continue to deliver services as normal during and after reorganisation. 

The reply referred to the Government’s 2024 guidance on best value standards and intervention, but did not confirm whether council surpluses would be protected or redistributed.

Ms Smith raised the issue again in the House of Commons during a statement on local government finance, after hearing further concerns from councils and constituents.

She said the minister responding to the debate again failed to provide a clear answer on whether council surpluses would be ringfenced for the communities where they were raised.

Ms Smith said:

“I raised this issue because both local residents and council leaders have contacted me with serious concerns about what these reorganisation plans could mean for their communities. Despite asking the question in writing and again on the floor of the House, the Government is still refusing to give a clear answer.”

She added:

“Residents in West Devon and the South Hams have every right to know whether money carefully managed by their councils will remain local or be used to cover debts elsewhere. Well-run councils should not be punished for the financial mismanagement of others.”

Ms Smith said the continued lack of certainty is adding to concern about local government reorganisation proposals linked to Plymouth, which she believes could disadvantage some communities.

She said she will continue to press the Government for clear safeguards to ensure that money raised and managed locally is kept for the benefit of local residents.