Oral Answers to Questions
Debate between Graham Stuart and Catherine McKinnell(10 months, 2 weeks ago)
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Graham Stuart
I could only just hear my hon. Friend’s question, as the shadow Secretary of State made it quite hard to hear. The Government recently completed a call for evidence on this very subject, looking at the introduction of non-price factors in the contracts for difference scheme so that it values things other than just cost deployment. My hon. Friend, like all Members on the Government Front Bench, wants the maximum number of jobs created and retained in this country.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Local Government Finance (England)
Debate between Graham Stuart and Catherine McKinnell(11 years, 3 months ago)
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Mr Stuart
My hon. Friend is right. The Opposition have made it absolutely clear that they wish to maintain the unfairness that impacts on the services provided to his constituents day in, day out. That is their message. Further to that, every single Opposition Member who says that they do not want this level of reduction in the overall amount spent on local government is calling for that money to come from cuts to the NHS. That is the truth. The Labour party has made it clear that it will not protect the NHS. It is only the Government who are committed to doing so and Labour Members, in every impassioned speech they make, are calling for reductions in spending on the NHS—real-terms cuts in health—so that councillors’ pensions can be protected alongside services.
Catherine McKinnell
I thank the hon. Gentleman for giving way. Some of the cuts that are being driven through in many of our cities will increase NHS costs because of the lack of support for vulnerable children and elderly people. The general lack of public services will ultimately be detrimental to people’s health.
Mr Stuart
I cannot help noticing that the hon. Lady absolutely refuses to rule out cutting the NHS, because that is her party’s policy. Most parties that go into opposition split—they start to divide. The unity of Labour in its commitment to cutting the NHS is, from the point of view of party loyalty, admirable. The hon. Lady, like other Opposition Members, has made it clear that the NHS can pay so that local government will not have to be asked to be more efficient and make savings.
Rural areas have long been poorly funded compared with urban areas, and they start from a significantly lower base. Talking about cash reductions in areas that receive much higher amounts of money does not give a fair and balanced picture. I agree that we should see the argument from all sides with regard not only to cash reductions, but to percentage cuts. The hon. Lady heard the Minister say that the percentage cut in Newcastle, which has a vastly greater budget than rural and deprived areas of the East Riding, is experiencing lower levels of reduction. To make out that it is the opposite and that this is an unparalleled assault on cities such as Newcastle misrepresents the settlement.
As I have said, the costs of delivery in sparsely populated areas are often higher than those in urban areas and, overall, rural residents earn less on average than people in urban areas. Labour Members have made out that everybody in an urban area is in the most terrible, deprived state, but most people in the cities are not and lots of people who live there earn more. They have higher average earnings than those in rural areas. Council tax in rural areas, where incomes are lower, is £75 a head higher. If we apply that across the household, we will see that the spending power in rural areas is lower. I sympathise with Labour Members on the closure of cultural centres in their areas, but my area does not have any because we do not have the money—the distribution is not fair.
Fair-minded people should recognise that reality. For too long, strident, sectarian interests have been allowed to dominate the debate. I call on Ministers to do more to understand the real costs of delivery across different service areas and make sure that we have a more informed debate than the political mud-slinging of those who represent urban areas as being entirely deprived. I do not want to be guilty of that in a rural sense.
The Department’s consultation in summer 2012 promised some improvement, but 75% of it was damped away. Since then, in meetings with the Minister, who, as I have said, has been most generous with his time, we have tried again and again—it is interesting to see Department officials present—to get the numbers so that we can all agree on them. I have brought along with me, especially for the Minister—I will hand it to him—the official governmental criteria of classification of councils, because Ministers have told me that they are not sure precisely how it works. Will the Minister who winds up the debate tell us what is happening to rural areas? I know this is not how money is allocated, but will the Department please do the assessment, if it has not done so already, of where the money is going to councils?
The official criteria of classification were agreed across Government in 2009. The document defines areas as rural-80, local authorities, rural-50, significant rural, major urban local authorities, large urban and other urban. Does it say that it is impossible to classify them? It does not—it is not true. It has been done by Government and the least that Ministers owe us is to tell us how those numbers work out across those particular designations.
Newcastle upon Tyne City Council
Debate between Graham Stuart and Catherine McKinnell(11 years, 4 months ago)
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Catherine McKinnell
It is obviously for my hon. Friend to speak on behalf of the people of Liverpool, but I have no doubt that the cuts are impacting on all of the core cities and I will make the economic point about that later in my speech.
Baroness Eaton, who was until recently the Conservative chair of the Local Government Association, described the Secretary of State’s understanding of the effect of local government cuts as
“detached from the reality councils are dealing with”.
I could not agree more. Meanwhile, Sir Merrick Cockell has called the cuts “unsustainable” and the Tory leader of Kent says that his county “can’t cope” with further reductions and is “running on empty”.
When deliberating on what I would raise in this debate —unfortunately time is short and it has been difficult to cut down my speech—I decided to think about what the Minister would say in response. That is fairly predictable, so I will use this opportunity to respond now to what I believe he will say.
I am sure that the Minister will claim, like the Secretary of State before him, that the average reduction in council spending power across the country has been only 1.7% and, indeed, that Newcastle has fared pretty well, because its spending power has fallen by only 1.5% in cash terms as a result of the recent funding settlement. I say to him that that is disingenuous at best and seriously misleading at worst.
The headline figure, which applies to only the first year of the settlement—2013-14—has in fact already been shown to be inaccurate and substantially understated, with the Department for Communities and Local Government double-counting the council tax support grant and council tax income for both 2012-13 and 2013-14. Other errors include the cut in the early intervention grant being significantly understated. Newcastle city council believes a more realistic estimate of the cut to be 3.2%, which is more than double the published figure, or a 4.9% cut in grant funding. I therefore ask the Minister to make a commitment this evening to ensure that statements made about the level of spending power cuts are formally corrected.
The 1.7% headline figure also completely masks the far greater cuts that will take place in year 2 of the settlement. Newcastle faces a 6.8% drop in spending power by 2014-15, compared with a 5.5% average fall in England and only 1.6% in Surrey.
The Minister will no doubt try to persuade me that the cuts being experienced by Newcastle are fair and not disproportionate when compared with other parts of the country, but the facts show clearly that over the next three years the cuts will be much higher in northern areas and a few inner-London boroughs. According to DCLG’s own figures, the cut in Newcastle’s spending power between 2012-13 and 2014-15 will be £218 per person, compared with a national average of £134 and a cut of only £27 per head in Wokingham.
I refer to Wokingham because, in returning to my predictions, I assume that the Minister intends to make the time-honoured comparison between Newcastle’s situation and that of the Berkshire town. He will inform us that Newcastle still has a spending power per household that is more than £700 greater than that in Wokingham. Nobody doubts that that is the case and let me be clear: I have nothing against Wokingham. I use that example because it is the one that Ministers always bring up whenever challenged on their approach to spending cuts.
I thought it might be helpful to clarify for the Minister precisely why Newcastle receives a higher grant than Wokingham—it is because our needs are higher. Newcastle has four times more children in care, greater homelessness needs, higher council tax support needs and fewer people who are able to self-fund their own elderly care. Compared with Wokingham, Newcastle receives four times as much funding for the statutory concessionary fares scheme, yet it faces costs that are nine times higher due to the sheer number of poorer pensioners who use bus services.
Catherine McKinnell
I am sorry, but I do not have much time to complete my speech.
Where local government finance becomes completely inexplicable is in the fact that Wokingham receives £124 more funding per household than Newcastle for “damping”, or protection against excessive loss of grant. Wokingham will receive an increase next year in resources to protect against excessive grant cuts that is three times greater than that in Newcastle. A system that was originally intended to protect councils from high levels of grant reductions is instead providing more protection to some of the wealthiest councils which have faced the smallest cuts in their spending power.
I suspect that the Minister will also mention the £16 billion in reserves, on which the Secretary of State believes councils are blithely sitting. However, he knows that the £16 billion figure across the country includes £12 billion of reserves that are earmarked for specific purposes, such as funding capital investment commitments in future years, meeting insurance claims, meeting equal pay or redundancy costs, and meeting the cost of flood damage that cannot be claimed under the Bellwin scheme. The latter point is of particular relevance to Newcastle, given the devastating flooding in parts of the city last year.
Indeed, reserves were referred to in the Secretary of State’s somewhat patronising document on 50 “sensible savings” that was published last month. I point out to the Minister that Newcastle city council has already made efficiencies of £100 million over the past three years and has undertaken almost all of the Department’s savings proposals.
In conclusion, Newcastle city council believes that it is in an impossibly difficult situation. Newcastle and other members of the Core Cities Group are having to write to the Secretary of State to inform him that
“there will be no money for anything but social care and refuse collection later in this decade”
unless the current funding plans are changed. The Secretary of State and his Ministers appear complacent, dismissive and even indifferent to the concerns that are being raised.
All I am asking is that they treat Newcastle city council and my constituents with the respect that they deserve and act urgently on their concerns.
Finance Bill
Debate between Graham Stuart and Catherine McKinnell(11 years, 10 months ago)
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Catherine McKinnell
Our position is that we would like none of the VAT changes to be introduced so by voting against new schedule 1 today, as I have already explained, we vote against all the VAT changes.
As was pointed out, if the pasty counter was near the oven, the ambient temperature would be higher. If it was near the chiller, the ambient temperature may be lower. Greggs’ official consultation document asked whether servers would ultimately have to take the temperature of both the pasty and the surrounding air to determine whether a 20% surcharge should be applied. The proposal was universally and rightly rounded on as ridiculous. Ken McMeikan, the chief executive of Greggs the bakers, which I am proud to say is based in my part of the world, Tyne and Wear, deserves a mention for his excellent campaign against the pasty tax. A massive £30 million was wiped off the value of the company in the week after the Budget as orders were threatened and jobs put at risk. Along with several hundred other bakers, Mr McMeikan delivered a petition to 10 Downing street. He told Ministers:
“we are the voice of half a million people. We embody their resentment at what this Government is trying to impose against the people’s will. . . ordinary hard working people simply do not want this pasty tax.”
I visited a local school breakfast club with Mr McMeikan and I know just how committed Greggs is to local schools and community projects. It did not deserve to have its business torpedoed by Ministers who are too out of touch ever to have eaten one of its products. Eventually the Government backed down on the pasty tax—they had to because that was the only move they could make—but they left behind them a legacy of arrogant disregard for ordinary people that will not quickly be forgotten. My only hope now is that the U-turn that has been made will be made properly. Representatives of Greggs are still raising concerns that the new wording of the regulations on hot food now state that VAT should be charged if it
“is provided…in packaging that retains heat (whether or not the packaging was primarily designed for that purpose)”.
The hon. Member for St Austell and Newquay (Stephen Gilbert) raised the matter with the Minister, but his answer did not provide certainty, so I would be grateful if he would clarify in his reply exactly how the Government will ensure certainty for this slightly battered production market.
Any sort of paper bag or wrapping could inadvertently help to retain heat, so there is a danger that pasties could still be caught in the regulations and that this whole incompetent mess of U-turns and retractions will all have been for nothing. I hope that the Government will take the opportunity to clarify that point and reassure Greggs and other bakers up and down the country that supplying customers with paper napkins, for example, which could inadvertently slow down the cooling process, will not result in an extra 20% charge for their customers.
Greggs would like confirmation, as I am sure would other bakers across the country, on whether taking trays of baked products from the oven and stacking them in counters that have no other means of heating or heat retention would be considered to be slowing down the cooling process. The practice is used by bakers to minimise food handling and the number of trays in use, but there are genuine concerns in the industry that it could constitute slowing down the cooling process and so incur a VAT charge.
The Government’s second U-turn was on their attempt to charge 20% VAT on static caravans—[Interruption.] I am asked from a sedentary position “Are you only on the second U-turn?” Yes, I am. I venture to guess that caravan holidays, like pasties, are not familiar to most members of the Cabinet. They saw an opportunity to take some extra tax and went ahead without considering the impact on individuals, jobs, growth or tourism. Because of the huge campaign mounted against the policy—I pay tribute to Members on both sides of the House for that, particularly hon. Members who represent the Hull constituencies, who are particularly concerned about the impact on jobs in their area—the Government backed down, but they are still trying to impose the 5% charge, as the Minister set out in more detail earlier.
The Treasury’s own figures show that 20% VAT on static caravans would result in a 30% fall in demand. The industry estimates that it would result in 1,000 job losses in manufacturing, excluding the supply chain. We know that at least one factory in the supply chain, Willerby Holiday Homes, put all 700 of its staff on a 90-day consultation as a direct result of the Government’s announcement that it would levy 20% VAT on its product. The National Caravan Council states that 4,300 jobs might be lost in holiday parks, plus another 1,500 jobs from associated suppliers.
I appreciate that the Minister has sought to give some reassurances on the change and indicated that the Government are listening, to the extent of reducing the VAT rate to 5%. However, he has made it clear today that no actual calculation has been made on the potential impact of the 5% charge, which is of great concern. Even the reduced charge of 5% will mean either that caravan holidays will become more expensive for holidaymakers or that holiday parks will be forced to absorb losses and job cuts. At a time when consumers are already severely squeezed, many people will simply have to go elsewhere. In turn, the whole economy of holiday towns would be hit, with shops, pubs and attractions losing their main business. Is that really what the Government intended?
Catherine McKinnell
I would be delighted if the hon. Gentleman would answer.
Mr Stuart
I am grateful to the hon. Lady, who is being most generous in giving way. I ask her to note that the National Caravan Council, the industry body, and the British Holiday and Home Parks Association have welcomed the 5% rate. They feel that the Government did listen and that the industry can take on that burden as part of the whole national effort to tackle the vast deficit her party left behind when it left government.
Catherine McKinnell
I am pleased that the industry is “delighted” with a 5% increase in VAT on its products. That is surprising in the circumstances.