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Sky News analysis has found that two Surrey councils spend more on interest and paying back loans than they do on services, like transport and social care.

Neighbouring borough councils Spelthorne and Runnymede have said they have had to make investments in response to government cuts.

Both councils’ investment has mainly been in commercial property, which they rent out for a profit.

In 2021/22, Spelthorne spent £36 million on financing debt, almost 60% more than the £22.8 million they spent on services.

Runnymede also spent nearly 50% more on debt than on services, spending £17 million on debt and £11.5 million on services.

Eastleigh, Basildon and North East Derbyshire all spent more than half of the amount they spend on services on repaying debt and interest.

Use our tool to see what your council spends on debt compared to what it spends on services, and how that’s changed in recent years.

Both Spelthorne and Runnymede suggest that there is no issue with their investments, however, as they’re making big returns.

A Spelthorne Borough Council spokesperson said: “The income that the portfolio generates each year far outweighs the debt and therefore the financing is not a burden, and in fact without this income, crucial service provision that support residents would be directly and adversely affected.

“[…] We acquired these investment assets acquisitions in 2016- 2018 as part of a Capital Strategy to generate sufficient long-term income to offset the impact of the disappearance of government grants.”

A Runnymede Borough Council spokesman said: “The Council made a strategic decision several years ago to borrow money from HM Treasury to invest in commercial property which we rent out.

“This was done to replace cuts in government funding which all local authorities suffered. We’ve used this income to pay for substantial regeneration in our towns, bringing fantastic facilities to the Borough, generating footfall for local businesses, creating new jobs, and revitalising town centres.

“The debts we hold are well managed and do not affect the way core Council services are provided.”

The cuts in government funding mentioned by both have affected other councils across England.

This includes the Revenue Support Grant, a central government grant given to local authorities which can be used to finance revenue expenditure on any service.

Needs-based central government grants like this used to be the largest source of revenue for councils.

But after more than a decade of austerity and changes in government funding, they rely far more on council tax and retained business rates levied on residential and commercial properties in their area.

Across England, the amount of Revenue Support Grant given to councils overall has decreased by 90% between 2013/14 to 2021/2022.

Previous Sky News analysis has shown deprived areas experienced the biggest reductions in spending power.

Big investment can go wrong for councils

Other councils have made big investments like Spelthorne and Runnymede in response to government cuts, but with less success.

Iain Murray, Director of Public Financial Management at the Chartered Institute of Public Finance and Accountancy (CIPFA) says councils need to consider the risks associated with big investments.

“They need to make decisions based on not just the here and now but model scenarios. A lot of these decisions were made in an environment where inflation was low and fairly static and stable,” he told Sky News.

“Since the last 12 months, we’re now in a completely different economic situation.”

In situations where things may have gone wrong, “it may be that there’s just not been enough forethought about some of the potential what ifs”.

Another Surrey council, Woking Borough Council, is one of several in England dealing with big debt problems.

The council said it was in the territory of issuing a Section 114 notice – which means the government has to intervene to ensure local services are sustainable.

Other councils face similar problems. Slough, Croydon and Thurrock – which has a £500m deficit caused by a series of disastrous investments in risky commercial projects – all issued Section 114 notices last year.

Woking had debts amounting to around £2bn.

Like other councils in England, Woking’s funding structure has changed significantly in the past decade.

Woking shared their sources of revenue with us for the 2011/12 and 2023/24 year.

The amount the council will receive in government funding for 2023/24 is 10% lower than it was in 2011/12, from £5.2 million to £4.7 million.

The amount of Revenue Support Grant it receives has decreased by 92% over the same period, while council tax receipts have risen by nearly 40%, from £8.3 million to £11.4 million.

Councils are running down their unallocated reserves

The reduction in government funding also means that some councils are running down their unallocated reserves.

Unallocated reserves are held so councils can continue to deliver local services when unexpected situations arise.

North Tyneside’s unallocated reserves have decreased by 90% from 2016/17 to 2021/22. They’re left with £690,000, equivalent to less than £3.50 per resident.

Unallocated reserves in Newark & Sherwood, in Nottinghamshire, Uttlesford, in Essex, and South Norfolk have also decreased by more than 80%.

Cllr James Jamieson, Chairman of the Local Government Association, said: “Over the past decade, councils have already done more than their fair share of the heavy lifting when it comes to putting public finances on a more sustainable footing.

“Many councils are still grappling with significant challenges when setting their budgets and trying to protect services from cutbacks due to the deep underlying and existing pressures they face.

“[…] Councils want to work with government on a long-term funding plan which ensures they have adequate resources, certainty and freedoms and can deliver local services for our communities.”

Does this mean councils will go bankrupt?

It’s not possible for a council to go bankrupt in the same way as an individual or a business, but what it can do is issue a Section 114 notice, which is effectively the same thing.

This Section 114 notice triggers a form of action which blocks any new spending and gives the council 21 days to meet and decide what to do next – typically setting a new budget reducing spending on services.

Funding for services like safeguarding vulnerable people are protected, existing financial commitments and contracts will be honoured, as well as ongoing payment of council staff.

On it’s own, councils spending large amounts on financing their debts and running down their reserves does not mean they’re at risk of issuing 114 notices, or financial disaster.

However, spending on debt and the amount reserves councils are getting through are indicators that CIPFA has identified that make councils less financially resilient.

Other identifiers of financial reliance are harder to measure.

For example, CIPFA suggests councils should have sound financial management and good governance.

Financial plans should be made in the medium term, rather than just trying to get from budget to budget in the way that struggling households might make money stretch to last from month to month.

This is harder for councils because the amount of funding they receive from central government is only set at the end of each financial year.

We noticed that several councils, like Thurrock and West Northamptonshire, weren’t able to report their accounts on time. West Northamptonshire, in particular, wasn’t able to submit some of its accounts despite receiving an extension.


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Michael Gove handed peerage – as Jeremy Hunt and cricketer James Anderson knighted

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Michael Gove handed peerage - as Jeremy Hunt and cricketer James Anderson knighted

Veteran cabinet minister Michael Gove has been awarded a peerage in Rishi Sunak’s resignation honours list.

Mr Gove – now editor of The Spectator magazine – was first elected to parliament in 2005 and immediately joined then-Conservative leader David Cameron’s shadow cabinet.

He was appointed education secretary when the party entered government in 2010 and held multiple cabinet posts until the 2024 general election, when he stood down from parliament.

Mr Sunak elevated seven allies to the House of Lords, including former cabinet ministers Mark Harper, Victoria Prentis, Alister Jack, and Simon Hart. Former chief executive of the Conservative Party, Stephen Massey, also becomes a peer, as well as Eleanor Shawcross, former head of the No10 policy unit. He also awarded a number of honours.

It is traditional for prime ministers to award peerages and other gongs upon their resignation from office – with key political allies, donors and staff often rewarded.

An outgoing prime minister can request that the reigning monarch grants peerages, knighthoods, damehoods or other awards in the British honours system to any number of people.

In the case of peerages, the House of Lords Appointments Commission vets the list, and for other honours, the Cabinet Office conducts checks.

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Resignation honours are separate from dissolution honours, which are awarded by the incumbent prime minister and opposition leaders after the dissolution of parliament preceding a general election.

Here are the biggest names given honours by Mr Sunak:

Michael Gove – peerage

Former cabinet minister Michael Gove. Pic: PA
Image:
Former cabinet minister Michael Gove. Pic: PA

From when the Conservatives returned to government in 2010, Michael Gove spent almost the whole time in a ministerial role.

After reforming the education system, he went on to hold roles like chief whip, environment secretary, justice secretary and housing secretary.

He led the pro-Brexit side of the 2016 referendum alongside Boris Johnson, and famously sunk the latter’s leadership bid with his own.

However, both failed at that juncture, and Mr Gove’s reputation never recovered to allow him another go at the top job.

The debt was repaid when Mr Johnson fired Mr Gove as his administration collapsed in 2022.

Mr Gove returned to government under Rishi Sunak, and ultimately retired from the Commons at the 2024 election.

James Anderson – knighthood

Lancashire bowler James Anderson. Pic: PA
Image:
Lancashire bowler James Anderson. Pic: PA

One of England’s most successful cricketers, Jimmy Anderson, has been awarded a knighthood in avid cricket fan Rishi Sunak’s resignation honours list.

He is regarded as one of the greatest bowlers in the history of the sport, and holds the record for the most wickets taken by a fast bowler in Test cricket.

Jeremy Hunt – knighthood

Jeremy Hunt.
Pic: Reuters
Image:
Jeremy Hunt.
Pic: Reuters

A former chancellor and serial runner-up in Tory leadership competitions, Jeremy Hunt was ever present in Conservative cabinets while the party was in government.

He was both foreign secretary and defence secretary before failing to take over the party after Theresa May stood aside.

Following a stint on the backbenches, Mr Hunt returned as chancellor under Liz Truss in a bid to stabilise markets – retaining this position under Rishi Sunak.

Despite persistent speculation he was set to be ditched in favour of Claire Coutinho, Mr Hunt kept his job until the 2024 general election – where he won his seat and now sits as a backbencher.

James Cleverly – knighthood

James Cleverly.
Pic: PA
Image:
James Cleverly.
Pic: PA

A former leader of the Conservatives in the London Assembly, James Cleverly entered parliament at the 2015 general election as the MP for Braintree.

In 2018, he was appointed deputy chairman of the party, and in April 2019, was appointed a minister in the Brexit department.

Boris Johnson appointed him as party chairman after taking over the top job, and he took on a succession of junior ministerial posts before becoming education secretary following Mr Johnson’s resignation as prime minister.

Liz Truss appointed him as foreign secretary – a post he held until November 2023 when Rishi Sunak brought back David Cameron for the role, and he took over as home secretary – a post he held until the general election.

Mr Cleverly was one of the lucky cabinet ministers to survive the Labour landslide and retained his seat. But he was less successful in the Conservative Party leadership contest, losing out in the final round of MP voting.

Andrew Mitchell – knighthood

Andrew Mitchell.
Pic: PA
Image:
Andrew Mitchell.
Pic: PA

The former deputy foreign secretary has been a fixture in Westminster since 1987, when he was first elected as the MP for Gedling. He was appointed to the government in 1994, but lost his seat in the 1997 Tony Blair landslide.

He returned to parliament in 2001 as the MP for Sutton Coldfield, and took on a number of shadow cabinet and then cabinet roles, culminating in his appointment to the Foreign Office in 2022, before becoming deputy foreign secretary to David Cameron in 2024.

He rose to public prominence in September 2012 when he allegedly swore when a police officer told him to dismount his bicycle and leave Downing Street through the pedestrian gate rather than the main gate. The incident became known as “Plebgate”.

Mel Stride – knighthood

Shadow chancellor of the Exchequer Mel Stride after Rachel Reeves delivered her spring statement to MPs.
Pic: PA
Image:
Shadow chancellor Mel Stride.
Pic: PA

One of Rishi Sunak’s closest aides, he chaired his campaign to be Tory leader against Liz Truss and was rewarded with the Work and Pensions brief when his man finally entered Number 10.

He was also a prominent figure in the downfall of Ms Truss as chair of the Treasury select committee – regularly requesting information from the Treasury and Bank of England that highlighted damaging information.

A capable media performer, he was ever present during the general election as he tried unsuccessfully to get Mr Sunak back into office.

Mr Stride kept his seat after the vote, and was rewarded by Kemi Badenoch with a role as shadow chancellor of the exchequer.

Stephen Massey – peerage

Stephen Massey
Image:
Stephen Massey

Described as a “sensible man” by former chancellor George Osborne, Stephen Massey was appointed chief executive of the Conservative Party in November 2022 after Rishi Sunak took over as leader in the coronation leadership contest following the collapse of the Truss government.

Having spent his career as a financial adviser, Mr Sunak probably thought he was a safe pair of hands in which to entrust the leadership of the party machinery as they built their war chest ahead of the general election to come.

The personal donations of £343,000 to the party and £25,000 to Mr Sunak’s leadership campaign also likely made him an attractive candidate for the job.

Has Rishi Sunak previously awarded honours?

Mr Sunak previously granted peerages to former prime minister Theresa May, Sir Graham Brady, the former chairman of the influential Conservative backbench 1922 committee, as well as his right-hand man Liam Booth-Smith on 4 July 2024 – the day of the general election.

He lost the election by a landslide to Sir Keir Starmer’s Labour Party, and resigned as prime minister that day. He remains in parliament as the MP for Richmond and Northallerton.

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This is a remarkable step by the government – and Donald Trump, China and Reform UK have all played their part

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This is a remarkable step by the government - and Donald Trump, China and Reform UK have all played their part

When the sun sets on Scunthorpe this Saturday, the town’s steelworks will likely have a new boss – Jonathan Reynolds.

The law that parliament will almost certainly approve this weekend hands the business secretary the powers to direct staff at British Steel, order raw materials and, crucially, keep the blast furnaces at the plant open.

This is not full nationalisation.

But it is an extraordinary step.

The Chinese firm Jingye will – on paper – remain the owner of British Steel.

But the UK state will insert itself into the corporate set-up to legally override the wishes of the multinational company.

A form of martial law invoked and applied to private enterprise.

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That will come at a cost to the taxpayer.

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No number has been specified, but there are wages to pay and orders to make at a site estimated to already be losing £700,000 a day.

There is also clear frustration in government at how the Chinese owners have engaged in negotiations around modernising the Scunthorpe site.

“Jingye have not been forthright throughout this process”, said the business secretary in his department’s official announcement about the new laws.

Time is so tight because of the nature of the steel-making process.

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Inside the UK’s last blast furnaces

Once switched off, blast furnaces are very hard to turn back on.

If this had happened in Scunthorpe – as seemed likely in a matter of days – then it would have been game over.

This move keeps the show on the road and opens up more time for talks over the long-term future of the plant.

While the official line in Whitehall is that “all options are on the table”, nationalisation seems increasingly likely.

That would need more legislation, if it was done – as seems likely – without the approval of the current owner.

Finding an alternative commercial partner has not been ruled out, but one is not waiting in the wings either.

As for what that long-term future looks like, with just five years of life left in the Scunthorpe blast furnaces, modernisation is inevitable.

Port Talbot’s plant saw its blast furnaces closed last year amid a switch to the more environmentally friendly electric arc furnaces and a loss of thousands of jobs.

A general view shows British Steel's Scunthorpe plant.
Pic Reuters
Image:
A general view shows British Steel’s Scunthorpe plant.
Pic Reuters

Political figures in Wales are now questioning why nationalisation wasn’t on the table for this site.

The response from government is that the deal was done by the previous Tory administration and the owners of the South Wales site agreed to the terms.

But there is also a sense that this decision over British Steel is being shaped by the domestic and international political context.

Labour came to power promising to revitalise left-behind communities and inject a sense of pride back into places still reeling from the loss of traditional industry.

With that in mind, it would be politically intolerable to see the UK’s last two blast furnaces closed and thousands of jobs lost in a relatively deprived part of the country.

Read more from Sky News:
Michael Gove handed peerage
Tickets on sale for Electoral Dysfunction live show
Badenoch denies supporting local coalitions

One of the two blast furnaces at British Steel's Scunthorpe operation
Image:
One of the two blast furnaces at British Steel’s Scunthorpe operation

Reform UK’s position of pushing for full and immediate nationalisation is also relevant, given the party is in electoral pursuit of Labour in many parts of the country where decline in manufacturing has been felt most acutely.

The geo-political situation is perhaps more pressing though.

Just look at the strength of the prime minister’s language in his Downing Street address – “our economic and national security are all on the line”.

The government’s reaction to the turmoil caused by President Donald Trump’s pronouncements on tariffs and security has been to emphasise the need to increase domestic resilience in both business and defence.

Becoming the only G7 nation unable to produce virgin steel at a time when globalisation appears to be in retreat hardly fits with that narrative.

It would also present serious practical questions about the ability of the UK to produce steel for defence and the broader switch to green energy production.

Then there is the intriguing subplot around US-China trade.

While this decision is separate from discussions with the White House on tariffs, one can imagine how a UK move to wrestle control of a site of national importance from its Chinese owner might go down with a US president currently engaged in a fierce trade war with Beijing.

This is a remarkable step from the government, but it is more a punctuation mark than a full answer.

The tension between manufacturing and decarbonisation remains, as do the challenges presented by a global economy appearing to fragment significantly.

But one thing is for sure.

As a political parable about changes to traditional industry and the challenges of globalisation, the saga of British Steel is hard to beat.

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Hundreds of barbers, car washes and American sweet shops raided in money laundering crackdown

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Hundreds of barbers, car washes and American sweet shops raided in money laundering crackdown

Hundreds of barber shops and other cash-heavy businesses have been targeted in a three-week money laundering blitz.

Police went to 265 premises, including vape shops, nail bars, American-themed sweet shops and car washes across England in a crackdown on high street crime.

The National Crime Agency (NCA) said 35 arrests were made, 97 people suspected to be victims of modern slavery were placed under police protection, and bank accounts containing more than £1m were frozen.

More than £40,000 in cash, some 200,000 cigarettes, 7,000 packs of tobacco, and more than 8,000 illegal vapes were also seized during Operation Machinize, which involved 19 different police forces and regional organised crime units.

Officers also found two cannabis farms containing a total of 150 plants, while 10 shops have been shut down.

The NCA estimates that £12bn of criminal cash is generated in the UK each year with businesses such as barber shops, vape shops, nail bars, American-themed sweet shops and car washes often used by criminals.

Goods seized during their visit to a vape shop in Rochdale.
Pic: GMP/PA
Image:
Goods seized during a visit to a vape shop in Rochdale. Pic: GMP/PA

Police officers at a shop in Tameside. 
Pic: GMP/PA
Image:
Police officers at a shop in Tameside. Pic: GMP/PA

Rachael Herbert, deputy director of the National Economic Crime Centre at the NCA, said: “Operation Machinize targeted barber shops and other high street businesses being used as cover for a whole range of criminality, all across the country.

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“We have seen links to drug trafficking and distribution, organised immigration crime, modern slavery and human trafficking, firearms, and the sale of illicit tobacco and vapes.

“We know cash-intensive businesses are used as fronts for money laundering, facilitating some of the highest harm and highest impact offending in the UK.”

Pic: NCA
Image:
Money laundering crackdown. Pic: NCA

Security minister Dan Jarvis said the operation “highlights the scale and complexity of the criminality our towns and cities face”.

“High street crime undermines our security, our borders, and the confidence of our communities, and I am determined to take the decisive action necessary to bring those responsible to justice,” he said.

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