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Theresa May faces calls to apologise after a secret tape emerged of a cash-strapped Tory council's boss talking about a "gentleman's agreement" with the government.

Surrey County Council leader David Hodge revealed the apparent deal as he persuaded colleagues to ditch a 15% council tax hike, according to audio leaked to the BBC.

There are now demands for Theresa May to apologise after she repeatedly denied there was a "sweetheart deal" to get cash-strapped Surrey more funds.

Just weeks ago she accused Jeremy Corbyn of "alternative facts" when the Labour leader accused her of backroom deals with the Tory town hall.

Tonight the government again denied there was any special deal between Surrey and the government.

(Image: PA)

The saga unfolded last month after Surrey ditched plans for a 15% council tax rise, which would have paid for social care but needed a politically damaging local referendum.

BBC Surrey obtained audio it said was of Mr Hodge at a meeting of his party's councillors around the time the hike was binned.

After asking councillors not to tweet, he can apparently be heard saying: "If what I call gentleman's agreements, that 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 voice on the tape adds: "A series of conversations took place with the Secretary of State for Local Government, in his car outside 10 Downing Street, looking for assurances, looking for clarification, looking for help basically on how we could stop a referendum."

(Image: REUTERS)

Labour shadow local government minister Gareth Thomas said: "This recording proves what we have long suspected.

"The Government came to a secret 'gentleman’s agreement' with the leadership of Surrey County Council, whilst the rest of country faces a crisis in social care and brutal cuts to council budgets.

"Theresa May and her ministers, including Sajid Javid, have been playing political games, conducting backroom sweetheart deals for their friends, whilst councils across the country struggle to cobble together the money to adequately fund social care.

"Theresa May must come clean about the terms of the deal offered to Surrey County Council, apologise for her Government’s misleading suggestion that there had been no such deal and ensure other local councils get the same treatment."

Lib Dem leader Tim Farron joined calls for Mrs May to apologise.

Lib Dem health spokesman Norman Lamb added: "The Government has shamelessly lied to Parliament and to the British people in denying that any special agreement was made with Surrey County Council. The Prime Minister now has serious questions to answer.

“The Government must come clean on exactly what this deal entails, when it was reached and who was involved. Full details must be made public immediately."

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A government spokesman 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.

"Surrey County Council informed the Government it wanted to become a pilot area for the 100% business rates retention scheme.

"DCLG made clear this was not possible for 2017/18, but subject to meeting the necessary criteria, it could apply in the 2018/19 pilot.

"As part of the statutory draft Local Government Finance Settlement consultation, DCLG discusses local government funding with councils across the country, of all types and all political parties.

"This happens every year, involves councils making representations to the government, and has always been the process."

Surrey Council leader David Hodge told ITV News late last night(TUE): "There was categorically no deal for Surrey.

"My understanding was that the Government was working on the issue of adult social care and we'll see what happens tomorrow in the Budget."

He said that was the nature of the "gentleman's agreement" he referred to.