Cuts have gone too far ... and revamp of business rates MUST go ahead
He was Whitehall’s top mandarin – and at the heart of a growing cash crisis. Now he has a blunt warning:
Rates row grows as Wales scraps appeals process
BATTLEGROUND: Last week’s Mail on Sunday on the escalating row
Javid in ‘betrayal’ storm after U-turn on business rates
LORD Kerslake is a real Sir Humphrey. Until recently he headed the UK civil service and was also chief mandarin at the Department for Communities and Local Government – the department at the centre of the business rates row.
Now a member of the House of Lords and free from his civil service constraints he is free to voice his worries. And he has a few.
Can the civil service cope with the workload of Brexit? Can local government cope with the care crisis? And what can the Government do to ease the burden on businesses facing huge business rate hikes?
On social care he is blunt. ‘I think there is a funding crisis now because carrying on the cuts we started in 2010, it is reaching the point where in my view it is unsustainable,’ he declares.
He should know. Since leaving Whitehall, Robert Kerslake, 61, has joined the Lords but he also holds a plethora of other jobs. As President
There is a crisis... we are squeezing care and putting pressure on places like this hospital
of the Local Government Association he has a clear view on the funding crisis in local Government, and the hike in business rates.
He is also chairman of King’s College Hospital NHS Foundation Trust in South London and feels how a shortage of care home services puts a burden on the NHS. ‘We are squeezing care and putting pressure on places like this hospital,’ he says.
The entrance to the site was a knot of cars and ambulances. Kerslake’s office is an oasis of calm away from the sirens’ blare.
It is also a fair way from the hubbub of Kerslake’s old stomping ground in Westminster which is abuzz with talk about how Chancellor Philip Hammond may act in his Budget on March 8 to help boost social care – where the companies that own most of the UK care homes are feeling a squeeze from rising wage bills and, of course, in some cases, rising business rates.
And this is clearly the burning issue of the day. Amid a wave of protest that companies face big hikes in their rates bills, the politician in charge, Communities and Local Government Secretary Sajid Javid, last week rubbished criticism as ‘distortions and half-truths’. Kerslake regards the confrontational approach as a mistake.
‘Where the Government might have done it differently is in acknowledging that there was an issue here for smaller businesses in high-value areas rather than, if you like, dismissing the whole campaign,’ he says.
The message is clear. ‘Very courageous, Minister,’ as Sir Humphrey might have put it.
In fact Kerslake demurs from the comparisons with TV’s most famous civil servant.
‘By the time Yes, Minister was produced it was already out of date – and has steadily got more out of date,’ he says.
Meanwhile, on business rates, the Government is backing down and Javid has promised that the Chancellor will announce measures in the Budget to help those who the Government now admits will be hit hard.
Kerslake thinks small firms that fall just outside the current relief measures need assistance. This means firms with a rateable value of just over £15,000 who are in some of Britain’s most expensive neighbourhoods, but are offered no relief under the current plans.
‘They should definitely look to help there,’ says Kerslake. But having said this he in no way thinks he Government should do a U-turn on the whole recent rates re-assessment. ‘I would be very concerned if they, in effect, felt the need to stand back from the whole plan of revaluation,’ he says.
Part of the reason for the shock of recent rate rises faced by some was the delay in revaluing commercial property. A revaluation was due in 2015 but was put off for two years.
The coalition decision to delay was for political reasons – so increased bills did not drop on shop owners’ mats just before the 2015 General Election. Surely the failure to consider the vertiginous rises caused by waiting a little longer shows how out of touch the White- hall machine is with small businesses?
‘I get that point,’ says Kerslake. ‘Maybe the lesson for the future is about more frequent rather than less frequent valuations. The longer you leave it the more difficult it is.’ That’s certainly true with council tax, which is still charged according to 26-year-old property valuations. ‘That makes business rates look like a relatively up-todate thing,’ he says dryly.
While Kerslake is critical of the way the rates issue has been handled, he does not believe it should be abandoned or that rates should be replaced with a different type of tax such as one levied on profits or sales rather than property. The rates changes may be hitting firms in affluent areas, but they are long overdue relief for those in less prosperous regions.
That two-year delay has saved London businesses about £1.6billion, while it is estimated to have cost companies in the North and Midlands an extra £2.3 billion, according to calculations by property agency GVA.
Kerslake has long understood the concerns of local Government. His first senior role was as chief executive of the London Borough of Hounslow, before he headed north in 1997 to become chief executive of Sheffield City Council.
Though born in Bath – a West Country accent is still clearly discernible – Kerslake has adopted Sheffield as his family home and when he was ennobled in 2015 he took the title Baron Kerslake of Endcliffe in the City of Sheffield.
His cufflinks bear the White Rose insignia of Yorkshire.
But his other key Northern credential is as chairman of the UK Northern Powerhouse advisory board. The private company runs events promoting the economic renaissance of the North, a pet project of former Chancellor George Osborne. ‘The gap continues to widen between the North and South but there are some really positive moves,’ he says, reeling off HS2 and the fact that inward investment to the North rose 25 per cent last year.
‘Devolution including financial devolution has to happen,’ Kerslake declares. ‘As somebody who has spent a number of years at the centre of Government, this will be a better country if it has less centralised power.’
Definitely not what a Sir Humphrey would say.
Maybe the lesson for the future is to have valuations more frequently rather than less