David Hodge, the leader of Surrey council, told Conservative colleagues that a “gentleman’s agreement” had been reached with senior cabinet ministers that persuaded him to cancel a threat to raise council tax by 15%.
In a secret recording of a Conservative group meeting on 7 February, the politician revealed there had been a “series of conversations” with the communities secretary, Sajid Javid, in a car outside Downing street. That was followed by a second meeting with the chancellor, Philip Hammond, he said.
Hodge told those in the room not to email or tweet his words as he shared details of meetings that appeared to take place between an MP acting as an intermediary and the cabinet members.
He said the MP was “looking for assurances, looking for clarification, looking for help basically on how we could stop the referendum” from Javid in the car.
“[The MP] then went inside and spoke to the chancellor – I think I can say that. He went inside and spoke to the chancellor, his spad [special advisor] was waiting ... He was with him and then the spad rang me with what we can and cannot say,” Hodge added, according to a transcript of the meeting passed to the Guardian.
A government source insisted on Tuesday that there had been no special deal for Surrey and that conversations about local government funding with councils took place regularly.
But Hodge implied that the outcome of the discussions was that he withdrew a decision to push for a referendum that would enable the council to raise the tax by 15%, and instead stick with the 4.99% allowed.
The council leader also suggested that he had something in writing linked to the agreement, but promised colleagues that he was prepared to return to the question of a referendum if the promise was not honoured.
The question over whether Surrey was subject to a sweetheart deal was raised in the House of Commons by the Labour leader, Jeremy Corbyn, a day after the meeting.
But this recording goes much further – with Hodge talking about his major worries about finances, particularly disability funding. He spoke about the government pushing forward with some form of funding review.
“We’ve agreed this morning that, subject to them agreeing, that if it’s possible, we will become part of that process going forward,” he said, before adding that he was not giving up the fight over disability funding or the Better Care Fund for social care.
“We listened carefully to the information that was being relayed back to us from government,” he added. “Yes, on one hand ... we should get something in writing. But on the other hand I do actually have something in writing ... which gives me a certain amount of comfort but I’m not going to release that information for obvious reasons.
“There may come a time that if what I call gentleman’s agreements, that the Conservative party often does, are not honoured, we will have to revisit this in nine months or a year’s time. If we do, let me assure you, you’ll have to drag me kicking and screaming not to go for a referendum next year.”
The shadow communities minister, Gareth Thomas, said: “Sajid Javid and Philip Hammond should come to the House of Commons and explain what the gentleman’s agreement that they’ve done – explain why they are offering it to Surrey council and not the rest of English councils trying to manage budgets that are at tipping point.”
The Liberal Democrats’ health spokesman, Norman Lamb, accused the government of “shamelessly” lying to parliament. “The prime minister now has serious questions to answer after she stood at the despatch box and called suggestions of a sweetheart deal ‘alternative facts’,” he said.
The meeting of the council’s Conservative group took place on a Tuesday, the same day that the council announced plans to cancel the referendum. The issue was then raised by Corbyn on the Wednesday.
The day after it emerged that Surrey county council had been chosen to take part in a new government pilot scheme, under which the local authority would retain 100% of business rates raised in the county.
But both Javid and the council strongly denied there was any sweetheart deal.
A government spokesperson said: “As we have repeatedly made clear, there was no special deal for Surrey county council and they will not receive any extra funding that would not otherwise be provided or offered to other councils. To imply the opposite is simply untrue.”
They said Surrey council had told the government it wanted to be part of the business rates pilot.
“[The Department for Communities and Local Government] made clear this was not possible for 2017/18, but subject to meeting the necessary criteria, it could apply in the 2018/19 pilot.”
They insisted that conversations about local government funding took place with councils across the country every year, as local politicians made representations to government.
A spokesman for Surrey county council said they could not comment on a meeting of the Conservative group, but said there had been no shift from a statement issued when the controversy first emerged.
Hodge said at the time: “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.”