COUNTY Hall bosses are on collision course with government officials as a tax loophole threatens to scupper their shake-up of provision for old folk.

Under the county's plans, they will shut 35 of their 48 care homes, including 19 in East Lancashire, and consultation has prompted outrage in the run-up to the final decision in July.

The council would rely on private care homes to provide the majority of nursing home places, even though it has pledged that nobody will be forced to move out of county care.

However, the county also wants nursing homes to start providing more respite and rehabilitation services, which will enable people to stay in their homes for longer.

A letter has already been sent to private care homes warning that fewer and fewer people will be admitted as permanent patients in the next few years, with more being spent on respite and rehabilitation places.

In his letter, social services councillor Chris Cheetham, urged homes to consider remodelling themselves in the future if they wanted to continue getting clients from County Hall.

But homes planning to swap have discovered they face a crippling tax rise if they stop catering only for long-term patients.

Current tax rules dictate that nursing homes and residential home owners only have to pay council tax if all of their residents are there on a permanent basis.

But homes which take short-term cases, provide rehabilitation and respite care have to pay business rates instead.

Frank Hessey, chairman of the Lancashire Care Association, today said that could mean a rise from £600 a year to £32,000 a year in tax.

Business rates go directly to the Government, whereas council tax goes to the local authority.

Coun Cheetham said: "We have been made aware of this and we are contacting the Government about it.

"Rehabilitation provision and respite care are important parts of our vision for the future which will help people stay in their homes rather than going into care, which is what many people want these days."

Mr Hessey said: "If this goes through unchanged, then homes will simply close overnight.

"They might be able to make the change to provide the short-term care but they won't be able to cover the extra charges.

"It is another reason why the changes proposed by Lancashire County Council should be halted now."

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