When David Hodge championed a referendum on raising Surrey’s council tax by 15 per cent, most of our readers, many Conservative MPs and some of his colleagues must have wondered what he had been smoking. There was no way that the good residents of that county were going to open their wallets on such a scale – not even to help the council provide social care. Hodge was cruising for a bruising. Surrey residents would vote the proposal down. He would be left with egg all over his face (and trousers). The county council would look for a new leader. The demand was one of the shortest suicide notes in history.
We now know better. Hodge evidently had a cunning plan: namely, to spook Ministers with the prospect of Surrey falling to the yellow peril or pesky independents or both in May’s elections – or, more likely, going a lot less blue. Our ever-alert readers will have noted that some very senior MPs represent seats in the county: Michael Gove, Chris Grayling, Jeremy Hunt and, not least, the Chancellor of the Exchequer himself, Philip Hammond. They are sensitive to what goes on in their back yard (what good local MP is not?), and will not have wanted it to host the mother of all local referendum smash-ups.
Hodge has put his case on this site: Surrey has seen its annual grant reduced by £170 million since 2010, funding formulas are unfair, central government support is on the way out altogether, and by 2019 “the system will be so unfair that the Government is expecting Surrey residents to pay them £17 million”. Government sources tell ConservativeHome that Surrey has already bumped up its council tax to cover the grant reductions, and that the country’s net reduction is £13 million on a budget of £1.6 billion. “Of course the council has spending pressures,” one said, “but…”
Most of our readers will side with the Government. Certainly, it is a truth universally acknowledged that if once a Conservative council starts raising council tax rather than cutting it, you might as well paint the town hall red and run the hammer and sickle up over it. (All other things being equal, which sometimes they are not.) But Hodge knew his Ministers – and the system. Hence the flurry of texts about a deal with the Government that he sent by mistake to the wrong person. And hence, too, the calling off of the referendum, and the proposed rise in council tax reduced from 15 per cent to five per cent – sorry, 4.99 per cent, just below the point at which central Government intervenes.
We do not mean to suggest, as Jeremy Corbyn did in the Commons earlier this week, that there has been a “sweetheart deal”. Heaven forbid. Local Government finance is a magician’s coffin, containing no shortage of false bottoms and secret cavities from which cash can be conjured up if necessary. One view from Surrey is that the ever-diplomatic Greg Clark would have found a way of crossing Hodge’s palm with silver long before the latter felt the need to tap out those text messages with his fingers. But be that as it may, a solution has clearly been found. The prospect of Surrey keeping its business rates early swirls obscurely amidst the haze.
So: Hodge triumphant. But is it really so? He has stirred up a hornet’s nest in Surrey. Some senior local councillors in the county clearly believed that he really was bent on holding the referendum, and may not appreciate having been played for suckers. Besides, those text messages may have wider ramifications. Had they been sent to the right person, the Government climbdown would not have made a national splash. But they weren’t, and it has. Council leaders will draw a moral: that if Ministers are put under enough pressure, they will cough up the loot. The latter won’t appreciate this outcome. Knives will be out for Hodge in Whitehall, assuming that they weren’t already.