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Private Surrey letters reignite possibility of secret deal between council and DCLG

Private communications between Whitehall and Surrey County Council published today have revealed possible collusion between the authority and government surrounding Surrey being given extra funding in return for calling off its referendum proposing a 15% tax raise.

When the council U-turned on its decision at the start of last month, it was unclear exactly why leaders decided to call off the referendum – but correspondences put online after multiple Freedom of Information requests have suggested that Surrey may have been offered a “sweetheart deal” of additional funding for in return for dropping the referendum.

It is thought that the government sought to avoid the politically embarrassing referendum that would have seen council tax rise by 15% to plug Surrey’s social care funding gap.

One text from Surrey’s senior finance director Sheila Little to Matthew Style, a senior DCLG official, read: “Matthew, the leader [David Hodge] has just sown [sic] me a note from a Surrey MP about a conversation late last night wit [sic] SJ [Sajid Javid]. Seems to indicate government are willing to get us some extra funding from 2018.”

She continued: “V [very] interested in whether this is sincere. As it stands isn’t enough to call the ref off? But could it be? Grateful if we can have an officer chat although I’ve told the leader he would need to speak to SJ.”

The published correspondences have heaped evidence onto the suggestion that a deal was reached between DCLG and the county council. For example, an email dated 9 January from Jonathan Lord, MP of Woking, a constituency in Surrey, to a number of senior government figures read: “Sajid led me to understand before Christmas that he would be trying very hard indeed to find £30 or £40 million to help Surrey out with the worst of its (government-dictated) financial dilemma.

“I am extremely unimpressed that he has not come up with the goods.”

Lord added: “If Saj was imprudent enough not to have £40m hidden under the departmental sofa for this sort of emergency/problem/outlier emerging from his department’s draft settlement, then I assume, if he is a man of his word that he must have done his best to put a strong case to the Treasury…

“If all his local government settlement money is really allocated... if the Treasury really is refusing to help out... and if he can't find a pot of money for the 'missing' learning disability grant...then Saj still has the option of adjusting all other council settlements down very slightly in order to accommodate the £31m needed for Surrey – and I think he should be encouraged to do this.”

The letters have prompted outrage from some key figures in the Labour Party, with frontbench shadow minister Barbara Keeley MP telling the Commons at a debate yesterday that the documents revealed the council had “extraordinary access” to ministers and their advisers.

In early February, Labour leader Jeremy Corbyn had read out texts sent from Hodge to a government minister that said: “I am advised that DCLG officials and my director of finance/CE have been working on a solution and that you would me [sic] contacting me to agree on an MoU [Memorandum of Understanding].”

The opposition leader then put the question to Theresa May: “How much did the government offer Surrey to kill this off and is the same sweetheart deal offered to every council to solve the social care crisis?”

But the prime minister had dismissed the idea of a deal as pure speculation, confirming to the media last month that “the deal that is on offer to all councils is the one that I have already set out”.

Hodge himself also put out a statement in February confirming that the decision to scrap the referendum was “ours alone”, and the DCLG reiterated that the government was not proposing extra funding to the county council that “is not otherwise provided or offered to other councils”. 

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