Porter: Business rates reforms will 'end in tears'

Addressing the LGA’s finance conference yesterday, Lord Porter (Con) also warned the social care crisis would “bite this government’s backside this year if it doesn’t get it sorted”.

Lord Porter said business rates was “going to end in tears because as soon as we have a row over what fair funding looks like, it will be a row”.

He said: “We are never going to agree that some people should lose. If they’re just talking about messing around with the same money in the system there will be losers and that’s not good enough.

“We need to completely rethink how we fund local government in this country or let’s just say ‘let’s not bother having it anymore’.

“If it’s too difficult or it doesn’t work or it doesn’t function properly, rather than messing around with structures let’s not have it. Let’s just let central government do it, because we know what a fantastic job they do…”

Letting councils raise an additional 1% on the social care precept in the next two years was “not going to be the solution” to the crisis, he said.

If there is no further funding for social care services, Lord Porter said there would likely have to be “a massive reorganisation of local government” which he warned would take up to four years and would “drag out a lot of pain and blood” across the country.

He suggested the government could free up funds by making pensioners claim for the winter fuel allowance rather than be handed it automatically, and make people pay half for the concessionary bus travel scheme.

The Tory peer also criticised the Department for Communities & Local Government for reneging on its promise of a four-year funding settlement for councils by shifting new homes bonus money to social care services.

The local government finance settlement saw £241m new homes bonus funding shifted to social care for 2017-18. LGC analysis showed a third of top tier councils stand to be net losers as a result of that, as well as all districts.

Lord Porter, who is also leader of South Holland DC, said he was “worried” about the way money had moved at such short notice having previously signed up to a four-year funding settlement.

“You don’t do retrospective deals with people - that is not the way to do business,” he said, and later added the policy was “barmy…not sustainable and not honest”.

However, the DCLG had only ever guaranteed revenue support grant, transitional funding and the rural services delivery grant for four years.  

Speaking in another session Stuart Hoggan, the DCLG’s deputy director for local government finance reform and settlement, said it “would not be possible” to have funded the policy through future new homes bonus allocations as most of the money would not come through the system quick enough.