Leaked recording reveals Surrey Council leader admit a 'gentleman's agreement' with Government over funding

Bombshell revelation will air on budget day

Surrey Council leader David Hodge is heard on tape sying there was a "gentleman's agreement" over Govenment funding (Surrey County Council)

A leaked recording reveals the leader of Surrey Council saying he struck a "gentleman’s agreement" with the Government over funding before scrapping a proposed 15 per cent council tax hike, despite previous denials.

In the recording obtained by BBC Surrey, Councillor David Hodge said he had obtained written and verbal assurances from ministers, including from Local Government Secretary Sajid Javid.

Last month, Prime Minister Theresa May denied Conservative-run Surrey was given a so-called “sweetheart deal" over proposed cuts to funding, accusing Labour leader Jeremy Corbyn of producing “alternative facts” when he quizzed her on the issue.

In the recording, which the BBC has yet to broadcast, Mr Hodge reportedly says "every leader... will always have these conversations to try and get a better deal".

Mr Hodge goes on to claim senior councillors and officials had telephone conversations with Mr Javid "in his car outside number 10" on the morning they took the vote to scrap the proposed 15 per cent hike.

He allegedly goes on to say he is ”looking for help on how we could stop a referendum“ and tells councillors of "a gentleman's agreement we have agreed this morning".

Mr Hodge announced he was abandoning plans for the 15 per cent increase during a council meeting in February – which would have required a referendum.

A rise of 4.99 per cent was approved instead, avoiding the need for a public vote.

When asked about the recording, Mr Hodge told the BBC he was still hoping the Chancellor would announce extra money for Surrey in the budget.

He said: “Every leader, if they're any good at the job, will always have these conversations to try and get a better deal.”

Asked if he was angry that the secret recording appeared to have been leaked by one of his own councillors, he replied: “I'm a politician, I don't get annoyed.”

The council announced its original plan for a 15 per cent rise in January, blaming Government cuts of £170m and an increased demand for social care.

The proposed increase would have added nearly £200 to a Band D bill and sparked a referendum which could have cost the authority up to £300,000.

The suggestion of a “sweetheart deal” was first made in February when Mr Hodge apparently sent text messages to the wrong person.

The texts, which he believed he was sending to Mr Javid’s assistant but were actually sent to a Labour local government politician, said: “I have received clarification from my chief executive who confirms Matthew Styles [Director of Local Government Finance, DCLG] and Sheila Little [Surrey County Council Director of Finance] have spoken and the numbers you indicated are the numbers that I understand are acceptable for me to accept and call off the R...” (presumed to mean referendum)

During Prime Ministers’ Questions, Labour leader Jeremy Corbyn pressed Theresa May on the issue, asking her to explain whether the same deal would be available to other local authorities facing a similar social care crisis.

A Downing Street spokesman said at the time there was “no basis” for the claim that a deal had been struck between the Government and Surrey.

The original increase was backed by Surrey's cabinet and risked becoming an embarrassment to the Government because Chancellor Philip Hammond and Health Secretary Jeremy Hunt have constituencies in the county.

After the texts emerged, Mr Hodge insisted there was no favourable deal for the council – which is in one of the most affluent areas of the country.

He said: “Surrey's decision not to proceed with a 15 per cent council tax increase was ours alone and there has been no deal between Surrey County Council and the Government.

"However, I am confident that the Government now understands the real pressures in adult social care and the need for a lasting solution."

The Government has repeatedly been accused of hitting poorer councils hardest with cuts to local authority funding.

Analysis done by Labour and the Liberal Democrats suggested the ten most deprived local authorities in the country were being hit 18 times harder than the ten most affluent councils.

Councils are hoping there will be significant extra funding made available for them in the budget in the face of a growing social care crisis.

Local authorities are now permitted to levy a council tax precept specifically for social care, but council leaders claim this will not be enough to plug the gap.