Government accused of 'sweetheart deal' as council scraps 15% tax hike

Jeremy Corbyn confronted the Prime Minister with a series of leaked text messages from Surrey County Council's leader which, he suggested, revealed negotiations on funding with Whitehall in order to "kill" the double-digit tax rise to pay for social care.

Surrey chief David Hodge insisted there had been no deal with the Government but said he was confident that ministers now understood the "real pressures" facing councils over social care, while Mrs May accused Labour of using "alternative facts".

A 15% rise would have triggered a referendum in Surrey, but Mr Hodge backed down on Tuesday and the council's bills will now go up by 4.99% instead - below the threshold requiring a public vote.

The proposal was politically sensitive for the Government because senior Tories including Chancellor Philip Hammond and Health Secretary Jeremy Hunt have constituencies in Surrey.

At Prime Minister's Questions, Mr Corbyn produced a series of text messages from Mr Hodge which Labour believe to have been intended for Nick King, a special adviser to Communities and Local Government Secretary Sajid Javid.

One message said: " I am advised that DCLG (Department for Communities and Local Government) officials and my director of finance/CE have been working on a solution and that you would be contacting me to agree an MOU (memorandum of understanding."

A second text message read: "The numbers you indicated are the numbers I understand are acceptable for me to accept and call off the R" - an apparent reference to the referendum.

The message ended with Mr Hodge saying "really want to kill this off".

The texts were sent on February 3, four days before the 15% tax hike was abandoned.

The Labour leader challenged the Prime Minister: "So how much did the Government offer Surrey to kill this off and is the same sweetheart deal on offer to every council facing the social care crisis created by (Mrs May's) Government?"

Mrs May stressed that all councils with responsibility for social care had the ability to raise council tax by an extra 3%.

She said of Mr Corbyn: "He comes to the despatch box making all sorts of claims. Yet again what we get from Labour is alternative facts; what they really need is an alternative leader."

A Downing Street spokesman said: "I'm not going to comment on leaked text messages, but I can assure you there is no sweetheart deal."

And Mr Hodge insisted: "Surrey's decision not to proceed with a 15% 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."

When he a nnouncing his U-turn on Tuesday, Mr Hodge indicated that he had been in talks with ministers and was "willing to take a risk" that a solution could be found.

Downing Street said the texts were never received by Mr King, and Mr Corbyn's office refused to comment on reports that they were sent in error to Newcastle County Council's Labour leader Nick Forbes, with a spokesman saying only that the messages "came from a source".

Number 10 sources insisted that it was routine and "entirely appropriate" for DCLG to have conversations with councils in the run-up to the local government finance settlement.

"As a result of these conversations, there is no extra cash for Surrey County Council," said the source, who stressed that the decision on the referendum was for the local authority to make.

A Labour source said: "Words are interpretable in different ways, but I think it's quite clear there has been discussions about numbers and that's led them to call off the referendum."

Shadow health secretary Jonathan Ashworth called for full disclosure of all Government contacts with Surrey over the council tax issue and demanded an urgent statement in the Commons from Mr Javid.

The Labour source said: "Both the Chancellor and the Health Secretary are Surrey constituency MPs and it is reasonable to ask what contacts have been made and what discussions have been had."

Hazel Watson, leader of the Liberal Democrat opposition group in Surrey, said: " The text messages sent by the leader of the council, referred to in PMQs today, mention 'numbers', 'proposals' and 'killing off the R' - but none of this information was shared with Surrey county councillors at our budget meeting yesterday.

"We need to know the precise details of what Surrey has been offered. The culture of secrecy that the Conservatives thrive upon at County Hall must end now."

Mr Ashworth wrote to the Prime Minister, calling for publication of all written and electronic correspondence on the matter.

In the letter he pointed out that the ministerial code " requires holders of public office to 'act and take decisions in an open and transparent manner' and that 'information should not be withheld from the public unless there are clear and lawful reasons for doing so'".

"I am therefore asking you to confirm that any misconduct by ministers related to this matter will be investigated and treated as a breach of the ministerial code."

Sixty-two Labour council leaders and directly elected mayors have written to Mrs May to seek assurance that any deal offered to Surrey will also be offered to them.

The letter said: "If a deal was struck, will ministers offer the same deal given to Surrey to all councils, regardless of political affiliation, when the local government finance settlement is published on February 22?

"We have a crisis in social care, resulting from the Conservative Government's cuts to local authority funding. Secret backroom deals are not the answer. We urgently need a proper solution, which means providing councils with the funding they need to solve this crisis."

The Department for Communities and Local Government said: "The Government is not proposing extra funding to Surrey County Council that is not otherwise provided or offered to other councils."

It said Surrey asked to become a pilot area in plans to allow councils to retain 100% of business rates and was told by Communities Secretary Sajid Javid it could take part in the second round of schemes in 2018/19.

"Surrey County Council informed the Government that they wished to become a pilot area," a spokesman said.

"The Secretary of State for Communities and Local Government told them that this was not possible for 2017/18, but said that, subject to due process and meeting the necessary criteria, they could participate in the 2018/19 pilot.

"All other councils will be free to apply to participate in these pilots, and the Government invites them to do so. The Department for Communities and Local Government has already held discussions about the 2018/19 pilots with several councils and it will be publishing more information shortly."