Theresa May accused of doing 'sweetheart deal' with Tory Surrey council to stop embarrassing tax rise

Theresa May has been accused of doing a “sweetheart deal” with a wealthy Conservative council to stop them raising council tax by 15 per cent.

Surrey County Council was due to hold a referendum to raise the local tax after warning that the social care system would be unsustainable without a sharp funding rise. The vote, however, abruptly cancelled on Tuesday.

At Prime Minister’s Questions on Wednesday Jeremy Corbyn produced leaked texts apparently from the flagship Tory council’s leader to a central government civil servant which suggested a “memorandum of understanding” had been reached to find a “solution”.

The Labour leader suggested any special deal for Surrey, one of the richest areas of the country, might have had something to do with the fact the Health Secretary Jeremy Hunt and the Chancellor Philip Hammond both represented constituencies in the county.

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“My question was whether there’d been a special deal done for Surrey – the leader said they’d had many conversations with the Government,” Mr Corbyn told Ms May.

“We know they have because I’ve been leaked copies of texts sent by the Tory leader David Hodge to someone called ‘Nick’ who works for ministers in the Department for Communities and Local Government.

“These texts advise that DCLG officials have been working on a solution and you will be contacting me to agree a memorandum of understanding.”

Ms May said: “The decision for whether or not to hold a referendum in Surrey is entirely a matter for Surrey County Council.”

The text messages appear to have been leaked after they were accidentally sent to a Labour politician called “Nick” instead of the civil servant called Nick they were intended for.

The revelation comes the same day as the National Audit Office warned that the Government’s £5.3bn plan to better integrate health and social care is failing to save money or stem the rise in hospital admissions.

Councils face a £2.6bn shortfall in social care finances by 2020 after being hit by central Government cuts to funding – and other council leaders were understood to be watching the Surrey case closely.

Additionally, the Government cap on council tax rises requires councils to hold costly referendums in order to increase funding, even if their costs rise.

A small exception was made to raise some money for social care, but council leaders have said this is nowhere near enough.

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Mr Hodge, the leader of Surrey County Council, said in a statement: “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.”

Later, a spokesperson for the Prime Minister insisted there had been “no deal” between the Government and Surrey County Council that prompted the referendum to be abandoned.

She also said the leaked text messages had not – as suggested – been sent to Nick King, the special adviser to Sajid Javid, the Local Government Secretary.

The spokesperson told journalists: “There is no extra cash for Surrey as a result of the conversations they have had about their settlement,” – conversations that were entirely normal, she insisted.

She added: “The allegation is that extra money was offered to call off the referendum – I’m saying that is not the case.

“Nick King has confirmed that the text messages that were read out during Prime Minister’s Questions were not received by him.”

The spokesperson would not speculate on the identity of the “Nick” to whom the messages were sent by the leader of Surrey County Council, suggesting that was not a matter for her.