Discretionary Social Fund (Redcar and Cleveland)

Debate between Ian Swales and Tom Blenkinsop

Wednesday 10th September 2014 Westminster Hall

[Ian Swales (Redcar) (LD)]

It is a great pleasure to serve under your chairmanship, Mrs Brooke. I rise to speak about a local issue: the discretionary social fund of Redcar and Cleveland borough council. I represent a corner of Yorkshire that has had mixed fortunes over the past few years. We have had a steep decline in employment in traditional industries over the past couple of decades, which has led to some real economic challenges. The restart of the steelworks in 2012 has helped to reverse the fortunes of the region, and with Government support there has been further improvement since then, with unemployment falling by 22% in the past year in my constituency.

My constituency remains 33rd out of 650 for unemployment, however, so there are some real challenges. It contains real pockets of deprivation: South Bank and Grangetown wards are among the most deprived in the whole country, and 80% of pupils at Grangetown primary school receive free school meals. I am particularly concerned to ensure that any help the Government can give on the social side is well targeted and reaches the people who need it.

Under the previous Government, the Department for Work and Pensions administered the discretionary social fund. That continued until the end of March 2013, and on 1 April 2013 responsibility for the social fund passed to local councils. Until that date, I cannot remember having any case work to do with the social fund. Clearly, people have needs, but the DWP seemed to be able to deal with cases on a basis that the people involved found acceptable. It is worth remembering that under the previous Government, the DWP did not have the power to refer people to food banks and other agencies. I am pleased that this Government have changed that, because if people need help, they should get the referrals that they need.

Councils assumed responsibility for the discretionary social fund. Redcar and Cleveland borough council’s cabinet papers contained a short description of the purpose of the fund:

“To provide financial assistance in times of crisis and assistance to customers returning to the community from a previous care arrangement.”

The money was given to the council for such purposes, although it was not ring-fenced; I will return to that point later. The DWP retained responsibility for situations of crisis that had to do with benefit transitions and delays. Will the Minister confirm that that is his reading of the situation? Is he comfortable that the new interface is working effectively? When the DWP had responsibility for the discretionary social fund, there was no interface, but one of the issues now is whether a crisis situation is the responsibility of the local council or the DWP.

The budget for the discretionary social fund was transferred to councils, and for 2013-14 there was programme funding of £631,000 and an allowance for administration costs of £133,000. In 2014-15, the amount of programme funding was the same, but the administration allowance was only £122,000. How were those amounts assessed? Clearly, some work was done in the DWP to assess need in the area. I would be interested to know, if the Minister has comparable figures, what the spend was in 2012-13, which led to the DWP’s assessment.

Redcar and Cleveland borough council, having received responsibility for the discretionary social fund, reacted in a constructive fashion and put together a comprehensive policy document. I have to say, however, that that document went way beyond the definitions that I have mentioned of what the money was for, and it contained a huge number of potential exclusions. Although I understand the need for controls and the avoidance of unnecessary claims on the fund, the policy document seemed to be more about setting out circumstances in which the money could not be given out rather than those in which it could.

The council has established an online application system, which raises concerns about exclusion, either because of digital access or literacy. We must remember that we are dealing with those who are in crisis and need. They may not have access to online equipment, or they may not be able to use it. I would be interested in the Minister’s comments on the application process, because I know that the DWP is moving in that direction. The council also established a policy that they would not make cash payments, to avoid the risk of discretionary social fund payments being spent on drugs, alcohol, tobacco or other things that would be unnecessary in a crisis situation.

What actually happened? In 2013-14, the council received 2,100 applications for the fund and it made awards in 195 cases, so less than 10% of applications were awarded. In fairness, the large number of unsuccessful applications—more than 1,900—includes those who were referred onward to the DWP because of the interface question that I have mentioned, so not all were complete rejections. Against the original allowance of £764,000, the spend in 2013-14 was £256,000, so more than £500,000 of the money given to the council was not actually spent. I do not have a breakdown of the £256,000, but assuming that the council spent more or less what was budgeted on administration, and I have no reason to think that that was not the case, the actual assistance given must have been some £120,000 out of the £631,000 that was allowed. That would mean that less than 20% of the money was given out. I also know that the total amount spent included money for section 17 children’s claims, which used to be met from a different budget in the council. The council also put some small amounts from the fund towards dealing with council tax for flooded properties. The amount that went to people in real hardship was a relatively small part of the total allocation.

As I have said, if I worked through the council’s policy document, I could find many ways of saying no to people’s claims. That has resulted in an increased case load for me as the local MP, and we have many examples of people being turned down. For example, someone was turned down because they had an annual mobile phone contract. Quite how they were supposed to turn that into cash to help with their crisis was not explained. That did not seem the right thing to do to someone who was experiencing a short-term problem.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The hon. Gentleman has mentioned the funds that have not been spent yet, which I believe are at about the £465,000 mark. The council has said that it is carrying those funds forward to use for future allocations. Does the hon. Gentleman believe that that is a wise course of action, in light of the fact that on 2 January this year, the Government cancelled discretionary social fund payments to councils for future years? Does he agree that the council could use that balance to help future DSF claimants, given that the Government will not make any further allocations?

[Ian Swales]

I thank the hon. Gentleman for that comment. I share his concern, which I will mention later. I hope the Minister will respond on the future of the DSF.

There was a £508,000 underspend, which has been added to the £754,000 allocation for the current year, 2014-15, which makes £1.26 million in total. As the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned, the council has set out a plan to spend that money over four years, rather than in just the one year that we would have had left under the original allocation, which addresses his point. The council clearly assumes that no further DSF money will be available beyond that period. More than £500,000 was required to be spent on crisis in our area, so will the Minister confirm that, through the various reforms, his Department plans to make that nil from the year 2015-16? If that is the case, I understand why the council might feel the need to spread the money more widely. More than £800,000 of the Department’s allocation for the two years 2013-14 and 2014-15 will actually be spent in three future years beyond the general election, which obviously has implications for spending versus politics.

The council has developed a comprehensive spending plan for the £1.26 million. Over a four-year period the council intends to make grant awards of £190,000 and loans of £300,000, of which it expects £75,000 to be repaid over the period. The citizens advice bureau will get £75,000, including £20,000 to improve financial capability. A carers charity will get £20,000 to help carers and the disabled apply for the funds. £75,000 will go to the local credit union to help make it sustainable. I mentioned the section 17 children’s awards, which will total £200,000. Some £475,000 will be spent on administration, which when added to the administration that happened in the first year, 2013-14, means that some £600,000 will be spent on administration—council processes and staff—as opposed to the £255,000 that was allocated for 2013-14 and 2014-15. The upshot is that over the next four years, of the £1.26 million, only £190,000, or about 15%, is available for straightforward grants to people in crisis. The plan is to spend the rest of the money in the ways that I have outlined. Does the Minister believe that his Department expected such a picture to emerge when it gave those funds?

The original purpose of the discretionary social fund was

“to provide financial assistance in times of crisis and assistance to customers returning to the community from a previous care arrangement.”

That was the council’s original remit for the money, and things have clearly moved on since then. The council’s plans are a bold attempt to address the issues of deprivation and the problems in our area, but my sense is that far less direct help is reaching those who are most in need, and my casework bears that out. I would appreciate it if the Minister responded on the balance of the spending.

This debate is about the discretionary social fund, but I cannot allow it to be completed without referring to the discretionary housing payment fund, which is associated with the discretionary social fund and is in place to address issues arising from the welfare reform process. In mid-February 2014, it was discovered that only just over half of the DHP money had been paid out for the year ending in March 2014. I understand that, unlike the discretionary social fund, the discretionary housing payment fund would have had to have been repaid if it had not been used within the financial year. Again, I was concerned by the number of rejections about which I was hearing. I wrote to the Minister’s colleague, Lord Freud, a number of times, especially on the issue of disabled adults.

The Minister for Pensions may be aware that it was Redcar and Cleveland borough council that lost a court case involving a disabled adult to whom it had not been prepared to pay a discretionary housing payment. The judgment clearly stated:

“In considering whether there is under-occupation of the appellant’s property, the local authority has not taken into consideration her disabilities and her reasonable requirements, as a result of these, to sleep in a bedroom of her own”.

It is certainly true, as Lord Freud kept writing back to me, that discretionary housing payments were meant to cover such circumstances, and the judgment made that very clear. The council, however, expected people in that situation to apply every three months for the renewal of their discretionary housing payment, and many other councils expect only an annual application, particularly from people who suffer from disability. The Minister for Pensions knows that I have consistently fought on that issue, and I was obviously pleased to support the Affordable Homes Bill introduced by my hon. Friend the Member for St Ives (Andrew George) last Friday. The anomaly for disabled adults will hopefully be addressed, assuming the Bill is enacted, and such court cases and difficulties for people will no longer be required.

The discretionary housing budget was spent by the council, and one way in which it was spent was that a number of local residents were delighted to receive an unexpected £1,000 cheque through their letterboxes. Some of them had moved up to six months previously because they had been under-occupying. I understand the council’s reluctance to provide the money at the time because it did not know whether the budget would extend and be sufficient for the last month of the year, but it managed to defray the money very quickly when the year end was approaching. Redcar and Cleveland borough council was of course one of the councils that applied for extra money, so not all the money arrived at the start of the year. However, I met a few delighted residents who had suddenly received £1,000 that they were not expecting.

The administration of the two funds raises questions about the competence and attitude of some of the staff involved in the process. Given the stories that I have heard, I believe that, overall, my constituents have suffered more than they need to suffer. I will refrain from saying that this was politically motivated, but there is no doubt that the Labour party has been able to campaign on welfare reform more effectively as a result of some of the issues.

I am obviously not raising this issue today to get a response from the Minister on every detail, so I will summarise. I have already asked a number of questions. Is he satisfied that the interface is clear on the Department’s responsibility for benefit transitions and delays, and on the council’s responsibility for the discretionary social fund? How was the discretionary social fund money given to the council for 2013-14 and 2014-15 assessed, and how did it compare with previous years, particularly 2012-13? Is it true that the Department expects the amount to be nil for 2015-16 and beyond? Is he happy that, over the next four years, only 15% of the discretionary social fund is budgeted for direct grants to individuals and that more than twice as much money is earmarked for council administration?

The Department has embarked on many challenging reforms, and any Government would have made quite a lot of those reforms. The Government have provided help, and the Department’s reputation depends on that help being used effectively. Clearly we support localism, but is he happy that the money is not ring-fenced? Should the Department say more about the criteria for the awards? Are local councils the right recipients of the funds? These are challenging times for many of my constituents, and the Government are carrying on the work of the previous Government in balancing taxpayers’ money and welfare and trying to mitigate the consequent effects. I look forward to the Minister’s response on how that has been happening in my local area.

Cost of Living

Debate between Ian Swales and Tom Blenkinsop

Wednesday 27th November 2013 Commons Chamber

[Ian Swales]

The £7 that I mentioned is net of the £1.50 VAT increase.

Interest rates are being kept down, and council tax has been frozen for three years in many areas. Sadly, my Labour council has preferred to take money out of people’s pockets rather than taking Government money to keep the council tax down.

[Tom Blenkinsop]

As a fellow MP in the Redcar and Cleveland borough council area, the hon. Gentleman will know that, between 2003 and 2007, the coalition Lib Dem, Conservative and independent council raised council tax by more than 25%, which was more than during the previous four years or the following four years under Labour.

[Ian Swales]

The hon. Gentleman has an excellent memory. I think that people will judge the council on how it is spending the money that it raises.

This Government have also scrapped Labour’s national insurance hike and, above all, implemented the Lib Dem policy of raising the tax threshold to £10,000.

NHS Funding (North-East and Teesside)

Debate between Ian Swales and Tom Blenkinsop

Tuesday 5th November 2013 Westminster Hall

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

This is an important opportunity to discuss concerns that my north-east colleagues and I have. I hope that the Minister takes our points on board, and takes the necessary steps to rectify the issues in the region’s health service.

I will discuss four topics this afternoon. The first is the funding provided by central Government to the region’s accident and emergency departments, particularly in the south Tees area. The second is the funding of the North East Ambulance Service NHS Foundation Trust, and the rising use and cost of private ambulances. The third is the ongoing Monitor investigations into the two foundation trusts—the South Tees Hospitals NHS Foundation Trust and the Tees, Esk and Wear Valleys NHS Foundation Trust—that serve my constituents. Finally, I will seek reassurance from the Minister on future funding allocations to north-east clinical commissioning groups.

Over the past 18 months, the accident and emergency department at James Cook university hospital, which serves my constituency, has come under particular pressure. In the run-up to winter last year, there were problems with handover times; ambulances and paramedics waited up to two and a half hours to admit patients, despite the national target time being 15 minutes. I raised that last year with the Secretary of State for Health, who agreed that the situation was completely unacceptable, and I raised it with the Minister on 13 February 2013 in a Westminster Hall debate on A and E provision in the north-east. In addition to the issues that I raised with the Secretary of State, it has become evident that the James Cook hospital’s A and E department struggled to manage with the pressure caused by winter.

In January and February 2013, the South Tees Hospitals NHS Foundation Trust failed to meet its target of seeing 95% of A and E patients within four hours. With James Cook hospital so clearly overstretched, I admit that I was surprised to discover in September 2013 that the Secretary of State decided not to award it, or any hospital trust in the north-east, funding to alleviate the pressure on A and E departments. It is beyond belief that, of the £250 million awarded by the Secretary of State between 53 trusts, not a penny will reach the north-east, particularly as we live in a region that suffers from some of England’s harshest winter weather and has some of the harshest local government cuts in the country. I hope that the Minister reconsiders that allocation, or at the very least clarifies why the Secretary of State made such a seemingly absurd and regionally disparate decision.

Recurrently, over many weeks, I have received expressions of concern from constituents about the increasing use of private ambulances in response to 999 calls in my constituency. I corresponded with the North East Ambulance Service on two such incidents, and its reply made it clear that central Government funding cuts are eroding that blue-light service:

“Each year we have discussions with our commissioners on the forecast number of incidents in the forthcoming year. The outcome of these discussions for 2013-14 were that commissioners felt it necessary to set our income on activity for the next 12 months at a level less than we were forecasting… So for 2013-14, we have been contracted to respond to 376,000 incidents, although we are forecasting activity at an estimated 415,000. This means that any incidents above 376,000 will be funded on a one-off basis rather than as recurrent annual income. These arrangements do not allow us to enhance our own workforce plan because the money for the additional activity will not be available next year to fund the extra salaries, overheads and vehicles we need to meet the extra demand.”

[Ian Swales (Redcar) (LD)]

The hon. Gentleman is making a powerful speech. Is he aware that Cleveland police vehicles and staff are also being increasingly used as unofficial ambulances?

[Tom Blenkinsop]

Yes, the police, and particularly the police and crime commissioner for Cleveland, have raised that with me in private meetings on first responder calls. They have funding worries about what will happen if such practices continually recur.

The NEAS letter shows that there will be more cuts, more private ambulances and possibly a less responsive service. It is not me saying that, but the chief operating officer of the North East Ambulance Service. The figures are stark. In 2008-09, 865 call-outs were attended by private ambulances in our region, costing £86,000. In 2009-10, some 1,816 call-outs were attended by private ambulances, costing £151,000. In 2010-11, however, 6,429 call-outs were attended by private ambulances, costing £477,000, which is a huge jump. In 2011-12, there were 9,000 call-outs attended by private ambulances, costing £639,000. In 2012-13, 13,524 call-outs were attended by private ambulances, costing £754,000. So since 2010, there has been a fivefold increase in private ambulance costs in the north-east, with the funds going to private contract firms. It is obvious that from 2010 onwards, there has been an explosion of private ambulance usage by the trust, costing a huge amount of taxpayers’ funds. The chief executive states:

“These arrangements do not allow us to enhance our own workforce plan because the money for the additional activity will not be available next year to fund the extra salaries, overheads and vehicles we need to meet the extra demand.”

A third issue of particular concern to my constituents is that both the NHS trusts that serve them—the South Tees Hospitals NHS Foundation Trust, and the Tees, Esk and Wear Valleys NHS Foundation Trust—have found themselves under investigation by Monitor in the past 12 months. Since May 2010, the South Tees trust has failed on seven occasions to meet its referral-to-treatment target, most recently between March and August. That has resulted in the Monitor investigation, because the trust has failed to ensure that 90% of patients commence treatment within 18 weeks of referral. Furthermore, there has been an increase in reported “never” events at the trust, and an increase in the incidence of clostridium difficile.

Despite the seriousness of those issues, Health Ministers have taken no action. My constituents would at the very least expect Ministers to have had conversations with Monitor and the trust on the issue, and on what support the Department of Health can provide, yet the Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison), confirmed to me in a written answer that

“No such discussions have taken place with Ministers.”—[Official Report, 22 October 2013; Vol. 569, c. 83W.]

Will the Minister please assure me that he will closely monitor the situation and have discussions with both Monitor and the South Tees trust on how the Department can provide support, including additional funding if necessary?

My final point is on allocations to the north-east’s clinical commissioning groups.

A recent working paper issued by NHS England on allocation and indicative target allocation outlines proposals that will reduce per-capita funding for CCGs across the north-east. People in Sunderland will each face a £146 cut, people in south Tyneside a £124 cut, people in Gateshead a £104 cut, and people in my constituency a £60 cut.

Finance (No. 2) Bill

Debate between Ian Swales and Tom Blenkinsop

Monday 15th April 2013 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I should like to address the comments of the hon. Member for Redcar (Ian Swales) about capital allowances. I, too, welcome the Government’s capital allowance proposals, but they are a U-turn—the Government reduced pre-2010 Labour levels of capital allowances to 25% of what they were, but have since returned them to pre-2010 levels.

The north-east leads the way on exports. Government Members have said that the export recovery has not occurred, but the north-east already had very good exports from industry. Compared with other regions in the country, the north-east leads the way. For example, Cleveland Potash at Boulby in my constituency today announced a £300 million investment, which will create 120 new jobs and secure more than 1,000 existing jobs in the potash pit. That occurs on the one-year anniversary of the recommencement of iron and steel production at the Redcar blast furnace at the Teesside Cast Products site, which is under the joint operation of Sahaviriya Steel Industries and Tata. That is a victory for the campaign of local people on Teesside, of which I was proud to be a part, as was the hon. Member for Redcar. Success is now synonymous with Teesside, and people in Teesside are proud to say that they are a success. We look forward to a future built upon the industrial development and manufacturing legacy of the 13 years under Labour.

Organisations such as the North East of England Process Industry Cluster were created in conjunction with the Labour Government and One North East. NEPIC centred on the north-east’s assets, particularly in the chemical and steel industries, and the heritage of shipbuilding—TAG Energy uses the Haverton Hill site, formerly a shipyard and dock, to produce monopile construction units for the offshore wind turbine market.

By contrast, the words “double dip”, “double debt” and “credit rating downgrade” are synonymous with the Prime Minister, the Chancellor and the Government. Since the autumn statement, growth, which was estimated to be poor, has halved in just over three months from 1.2% to 0.6%. The accrual of debt by this downgraded Chancellor from 2010 to 2015 is more than the total debt accrued by the previous Labour Government in their entire 13 years. Despite that and the overwhelming evidence, the Chancellor affirmed in his Budget that borrowing is falling. Public borrowing shows that the Government books were in the red to the tune of £121 billion last year. They are forecast to improve only marginally to £120.9 billion in 2012-13.

Tax revenues have fallen £5.1 billion short of the predictions in the autumn statement, despite the hailed employment figures. That is largely owing to the fact that, despite increases in nominal employment, productivity has fallen massively. That is matched by a huge fall in tax take. The irony is that we have always been told that the private sector is more efficient. Supposedly, we have 1 million more private sector workers, and gross domestic product is falling, so more people are doing less. That is a re-unbalancing of the economy if I ever saw one.

Similarly, the increase in the number of employed women is largely due to the fact that fewer women between the ages of 60 and 64 have retired. Women are working to a later age because state old age pensions have changed. That has undoubtedly helped employment figures. The Chancellor was able to massage his borrowing down only by persuading the OBR that Government Departments would spend £3.4 billion less than their allocated budgets this year. Only three months after the previous forecast, the budget deficit is expected to be an average £11 billion worse throughout the five-year forecast period. In cash terms, the problem lies with poor tax receipts, which have been hit by disappointing revenues this year, and vastly reduced forecasts for nominal gross domestic product, which is now at one seventh of the original growth expectations set in June 2010.

On the other hand, Robert Chote and the OBR assume the economy has the scope for rapid catch-up growth of 2.3% of national income even after April 2018. But with so much slack in the economy to be assumed for the rest of this decade, it is strange that the OBR does not show inflation falling below its target level of 2% at any time. Are Ministers concerned by that? If the OBR admitted this to be the case, it could no longer live within the Chancellor’s demands and would probably have to admit not £9 billion, but something more in the region of £17 billion a year of tax rises or spending cuts, as a result of earlier Government inaction.

The nation’s debt and the Government’s borrowing are completely dependent upon the Chancellor’s “monetary activism”. However, minutes of the Bank of England’s latest meeting show that the new Governor, Mark Carney, failed to win any support for his case for further quantitative easing. Most of the MPC look worried about the potential damage of a run on sterling, and the effectiveness in any case of further asset purchases as banks and households look to clear debts. However, without further QE, the Chancellor cannot keep his borrowing rates down, as the borrowing at low rates to buy gilts in order to borrow at low rates is the true reason for low interest rates, not the heavily front-ended, growth-strangling cuts we have witnessed to date.

Furthermore, big businesses continual deleveraging will not be turned into sudden investment with further corporation tax cuts. Corporation tax cuts will just aid business to further deleverage debt. It has never been so cheap for the state to borrow, and the Chancellor is neither using this cheap accessible capital to pump-prime the economy nor persuading banks and big business to free up their substantial reserves and corporate funds. The Chancellor’s language and tone set the mood music for the economy, and his constant message of national deleveraging has sent everyone into a deleveraging frenzy. Banks are hoarding excess capital and large corporate companies are simultaneously paying out large dividends to shareholders while sitting on excess capital, with the explicit purpose of holding it in case they need to make future debt clearances rather than investments.

[Ian Swales]

The hon. Gentleman is making a powerful case. Does he not welcome the Infrastructure (Financial Assistance) Act 2012, which uses low Government interest rates to underwrite £50 billion of infrastructure spending?

[Tom Blenkinsop]

As the hon. Gentleman knows, certain programmes, such as the Government’s rebuilding schools programme—which has been delayed for a year in one school in Guisborough in my constituency—are dependent on PFI arrangements, which raise capital from the bond market. We had a slightly different arrangement for the Building Schools for the Future project. We now have the sudden realisation that the cancellation of such capital projects, in the first two years of this Government, has sent the economy into a spiral.

The real issue for me, especially in the north-east, is connectivity. We want to develop our economic base, but rail electrification will go only as far as York. What we want is access to capital funds to get electrification done as soon as possible. I hope that that will yield some results, but it is already too late. We have already had nigh on three years with little investment, and now the situation is desperate. Capital is still very slow in coming from Whitehall, exacerbated by the lack of agencies in the region to assist businesses, even given the regional growth fund. How we solve that, given that those agencies have been dismantled, I do not know, but we need to do more.

Added to the Chancellor’s mood music and the deleveraging frenzy, we have a Government delaying the payment of bills to hide borrowing. The delaying of these payments—largely to big businesses—leads to deleveraging big businesses, with vast sums under the corporate mattress, using smaller businesses as an extra line of credit. Current unpaid bills to small and medium-sized enterprises total £36.4 billion, with some small businesses writing off bills to the tune of £10,000. An illustration of this is the 7% year-on-year contraction in construction, which has its lowest growth rate since 1987.

The Chancellor is aware of this issue. In the north-east, according to the regional Federation of Small Businesses, banks cannot apparently give a regional figure for the take-up of the funding for lending scheme for business. We need to hold banks to account for that. The north-east has 134,000 businesses—I mentioned two of the larger ones earlier. A thousand employ more than 50 people, while 96,000 are sole traders, who by and large do not pay corporation tax. This April, real-time information will be introduced, but apparently only 25% of FSB members know what RTI is. I suggest to Ministers that small businesses should be given a proper period of slack on the introduction of RTI. The Government have allowed six months, but extending this to 12 months might be necessary so that businesses can adapt properly. However, the closure of local HMRC tax inquiry offices in the north-east—a region with a large sole trader community—means that we will be far more exposed to transitional difficulties.

The sole traders, market town traders and small businesses on our high streets will not only have RTI to contend with. The national minimum wage is lower now, in real terms, than it was in 2004. It was raised by 1.9% today, but the consumer prices index is at 2.8%, so it is a real-terms cut. Small businesses and their customers in the north-east will see working tax credit freezes from this April, meaning those working under 30 hours will lose between £303 and £428. That is £303 to £428 less to spend. Benefits being capped at 1% rather than CPI will mean that small businesses’ customers lose up to £150. That is £150 less to spend. The bedroom tax—a housing benefit cut of between 14% and 24%—will mean they lose between £624 and £1,144. That is £624 to £1,144 less to spend. The benefit cap, to be rolled out nationally from September, will mean small businesses’ customers will lose on average £4,836, which is an average of £93 a week. That is £93 less per week for their customers to spend. The council tax benefit cut—the Tories’ new poll tax—will mean that 700,000 people in employment will lose between £250 to £600 each, meaning small businesses’ regular customers will have between £250 and £600 less to spend. This will no doubt compound an already obvious demand crisis.

After the mummy tax and the granny tax, the end of the pregnancy grant, and VAT being increased again by a Tory Government, there will be obvious consequences for sole traders and small business in general. How do the Government think these reductions in the disposable income of small businesses’ most frequent and dependable customers will resolve this country’s economic growth problems? In the autumn statement, private consumption was expected to be a crucial driver of Britain’s growth in the years ahead. The OBR expected growth in 2012 to come from private consumption. Indeed, it revised it up to 37.5% of all growth after last year’s omnishambles Budget. Of course, it did not happen. The promised—albeit simultaneously derided—consumer growth was not delivered. Page 100 of the Red Book assumes a jump of 0.7%, from 0.5% this year to 1.2% next year, in household consumption, even though it simultaneously predicts unemployment increasing in 2013-14 and the claimant count increasing from 1.58 million to 1.63 million in the same period. The Chancellor also failed to inform the nation that 400,000 disabled people on severe or enhanced disabled benefits will now have to pay council tax for the first time ever.

In conjunction with what I illustrated earlier, these are demand-sapping policies on a monumental scale. Are they being taken because the Government fear that their other policies will bring about inflation? Are they attacking demand deliberately in order to control inflation? We know that Mark Carney, the new Governor of the Bank of England, will be constrained by a 2% inflation target. However, we also know that inflation crept up to between 2.5% and 3%—around the 2.8% mark between January and February—this year. That inflation rise, at the same time as pay freezes, local real-terms pay cuts and benefits reductions, has seen families subject to an unprecedented cost of living crisis. According to uSwitch, Britons collectively owe £637 million to energy firms— £159 million more than last year’s projections. Some 20% of all energy customers surveyed are in debt, a figure that has risen by 14% since last year.

In conclusion, with falling disposal income levels and increasing household outgoings, the temporary retail or consumer growth we are currently seeing is very small. As well as being derided in the first place by Government Members as the wrong type of growth, given the Government’s other policies, it is unsustainable in the medium and long term. The Budget is fundamentally unfair: it does not address growth, it doubles the debt and it does not deal with the deficit—it actually makes it worse. It fails on all the original criteria set out by the Chancellor in June 2010.

Community Hospitals (North-East)

Debate between Ian Swales and Tom Blenkinsop

Wednesday 20th June 2012 Commons Chamber

[Ian Swales]

Thank you for your advice, Mr Deputy Speaker.

I congratulate my neighbouring MP, the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), on securing this important debate. My daughter was born in Guisborough hospital in his constituency, but that would no longer be possible as the maternity unit closed in 2006. The withdrawal of services from older community hospitals, and the failure to put services into new community hospitals such as Redcar, are top-down decisions. Does he support more locally based commissioning driven by clinicians?

[Tom Blenkinsop]

I believe in an excellent quality of service, and yes, it was regrettable that the maternity unit at Guisborough hospital was closed. As the hon. Gentleman will know, my predecessor fought to save that service. In fact, there was a wide campaign by the local trust and all local politicians to keep it open. Unfortunately, more people opted to use the maternity services at James Cook hospital, which was part of the choice agenda that all parties believe in. I am sure the Minister does as well.

Budget (North-East)

Debate between Ian Swales and Tom Blenkinsop

Tuesday 17th April 2012 Westminster Hall

[Ian Swales]

I am sure the Minister will respond to that.

Of course our region needs specific help. I welcome the extra £1 billion for the regional growth fund, which has already helped 93 companies in the north-east and is targeted specifically at regions such as ours. Last week’s announcement of help for up to 1,000 jobs in Wallsend in the offshore wind industry was especially welcome.

These occasions usually include a lament from the Opposition for the RDA. However, I shed few tears for an organisation that, in the two years before the general election, spent £148 million on 96 projects in which the directors had to declare an interest, spent nearly £400,000 on gagging orders for 12 staff, and, according to Experian, left Hartlepool, Middlesbrough, and Redcar and Cleveland as the three areas of the country, out of 324, least able to cope with austerity.

[Tom Blenkinsop]

Will the hon. Gentleman give way?

[Ian Swales]

I have given way twice already.

I congratulate the Tees Valley LEP on the excellent start it has made and I welcome the further £11 million in the Growing Places fund announced for north-east LEPs.

The press has picked up on certain items in the Budget, so I will finish with three questions to the Minister. I have spoken to the directors of Greggs. Will the so-called pasty tax not move rather than remove the anomalies? I do not relish asking the Greggs staff to feel the temperature of my sausage roll before deciding the price. Secondly, to those worried about charitable giving, tax relief on charitable contributions that would otherwise be taxed at 50% effectively means the Government will match donations pound for pound. Should that use of taxpayers’ money really be unlimited? Thirdly, how do the Opposition justify a situation in which young people on the minimum wage, who are trying to make their way in life, are paying £600 more in tax than their grannies who are on the same income? As we move towards a threshold of £10,000 for all, is that not a matter of fairness? Budgets cannot please all the people all the time, but help for business and the big reduction in tax for basic rate taxpayers means that this one has a lot going for it.

Business Rates (North-East)

Debate between Ian Swales and Tom Blenkinsop

Tuesday 25th October 2011 Westminster Hall

[Ian Swales (Redcar) (LD)]

It is a pleasure to serve under your chairmanship, Mr Amess. I congratulate the hon. Member for Sunderland Central (Julie Elliott) on securing this important debate.

As an accountant for ICI in the mid-1980s, I remember signing cheques for more than £6 million for local authority rates and the furore in 1988 when the then Conservative Government decided to centralise business rates, take money from the industrialised north and move it to the leafy south—as it was portrayed at the time. It is somewhat ironic, therefore, that we are now having this debate about taking money from the deindustrialised north and again moving it to the leafy south. Although I speak for the Government I also speak very strongly for my constituency and as a member of the north-east community of MPs; both of those come ahead of my party or Government loyalty on this issue.

My constituency and that of my hon. Friend the Member for Bradford East (Mr Ward) share the distinction of being the two constituencies on the Government side of the House with the worst unemployment rates, so it is a pleasure to see my hon. Friend in the Chamber. My constituency also shares a lot of characteristics with Sunderland, Hartlepool and a number of the other areas that have already been mentioned.

We have not spoken about the views of business. Some 66% of businesses have spoken in favour of the move, and only 20% against. It is important that we listen to them as part of the consultation. Businesses want to be part of their local communities. They want their success to be shared in the local community. Most of them do not want to see any benefits being siphoned off to Whitehall. Apart from Malta, we have the most centralised tax system in Europe, so some move towards localisation of tax raising is surely sensible.

I do not know how many hon. Members are friends of the complex formula grant system. Only last weekend, I joked in a speech that I thought that my hon. Friend the Minister was probably the only person who really understood the full detail of the formula. Of course most north-east councils are not happy with the current formula grant system. It is too complicated and too subject to the whim of Whitehall. I do not know who its friends are, but I would not mourn its passing.

There seems to be a lot of misreporting or misunderstanding of the scheme the Government propose. As I understand it, no one will be worse off in the first year, although some speakers today have suggested that they will be. Both the Deputy Prime Minister and the Secretary of State for Communities and Local Government have said that the starting point will be equalisation, top-ups and tariffs, so in the first year of launch all councils will be in the same position. Obviously what happens after the first year is a concern. We have talked about industries dying and being born. I think that the Government have spoken about what they will do in those circumstances but we need more detail, as previous speakers have said. I hope that the Minister will respond to that point.

The proposals include provision for a full 10-year review of where the system has got to, but nobody seems to be recognising that. Hopefully, the Minister will give us more detail about the review.

There is nothing to stop councils pooling resources or using other arrangements, if they feel that they want to share the benefits or issues in their area. We should all welcome the freedom that local councils will have. Nobody has spoken about the effect on local councils of the new Government scheme; I hope that the Minister will do so. From the way people have been speaking so far in the debate, there seems to be an assumption that every council is unitary, but I have had a letter from the Cleveland Local Councils Association asking what the effect of the new scheme will be on its members. Our parish, town and district councils are not clear about how the new scheme will work for them. As I say, I hope the Minister will address that point too.

Some interesting points have been made in the debate, but the overwhelming feeling of the speakers so far has been pessimism. That is one of our problems in the north-east; we are generally seen to be pessimistic.

[Tom Blenkinsop]

The pessimism among Labour MPs that the hon. Gentleman is probably referring to might be born from, for example, the Government’s programme on the regional growth fund. We have waited six months for funding. It will be welcome funding, for example for a potash mine in my constituency, but it still has not arrived. That type of practical example might lead to pessimism.

[Ian Swales]

The local enterprise partnerships are doing a good job, certainly in our area, and with the regional growth fund there is a simple due diligence process going on. There is a project starting in my constituency right now, with holes being dug in the ground this week. That project has attracted £7 million of regional growth fund money. The time lag has simply been to ensure that the schemes that will be supported are the right ones.

I want to pick up on the point about manufacturing versus retail. Clearly, it is a fallacious comparison, because manufacturing takes up more space than retail. Right now, a manufacturer in my constituency wants another acre of land to add to the acre that they already have. There is no retailer asking for another acre of land, so the basis for saying, “It’s all about retail, not manufacturing”, does not stand up at all.

I am optimistic, because we have enormous potential in the north-east. The other night, I went to the launch of Energi Coast, when 19 companies involved in the offshore renewable energy industry came together to launch joint marketing. They are all talking about a boom time, like the start of the North sea oil industry.

Nevertheless, I worry about the proposals. We need a lot more detail, but we also need a can-do attitude. I say that to my local council all the time, because it often does not have a can-do attitude when it comes to new business. Sharing the benefits of business growth is in all our interests.

Finance (No. 3) Bill

Debate between Ian Swales and Tom Blenkinsop

Tuesday 5th July 2011 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I should like to speak to amendment 12. It is a great pleasure to talk about places that I know well, such as the Teesside Cast Products plant in Redcar, Stocksbridge, Hartlepool and Scunthorpe, as well as Skinningrove in my own constituency.

The chemical industry is no longer the dirty industry depicted in Ron Angel’s “Chemical Worker’s Song”. On Teesside, between 35,000 and 45,000 workers are directly or indirectly employed in the industry, and over the past 18 years, it has reduced its emissions by some 75%. That has been matched by the steel sector’s reduction in energy per tonne of steel produced from 31.7 GJ in 1973 to 19.4 GJ in 2010.

[Ian Swales]

Does the hon. Gentleman agree that those industries need no further encouragement to reduce their energy use, because, by definition, they already spend a large proportion of their money on energy? They all have a good record in reducing their energy use.

[Tom Blenkinsop]

I thank the hon. Gentleman for his comment, and I entirely agree with him. The industries are in it to make money, and it is obvious to anyone who knows them that they need to reduce the amount of energy that they expend to make their products.

British manufacturing output as a whole has been growing for decades, according to figures from the Office for National Statistics. Why is that? Output in the chemicals industry has increased, unlike in other sectors. During the 2008-09 downturn, the industry suffered the second smallest decline in production. The development of the chemical industry over the last decade under Labour has been largely unreported. Only now is it being seen as a sexy subject. However, in places such as Middlesbrough, Redcar and Billingham, we have always referred to ourselves as proud smoggies, in the knowledge that our manufacturing endeavours have far more worth than the machinations of the City.

According to DECC statistics on greenhouse gas reduction, the disappearance of the chemicals sector would directly save an average 10.79 million metric tonnes of CO₂ equivalent, out of the total UK generation of 627.85 million metric tonnes of CO₂ equivalent. Across industry, the chemicals sector is responsible for only 3.9% of energy-related emissions. The growth reviews in November and December last year gave good signals to manufacturing. However, the rhetoric contained in those reviews assumed that a low-carbon economy could emerge only by pricing energy-intensive users out of the market. The flaw in that logic is the assumption that the full substitution of fossil fuels will miraculously come about if intensive energy users are strangled. A further flaw is that the technology that will develop green industries actually flows from the existing energy-intensive industries, their research and development, and their skilled work forces, but they will obviously no longer exist in the UK if we force them abroad.

The December growth review stated that high energy prices were a barrier to advanced manufacturing growth, yet the Secretary of State for Environment and Climate Change said at the same time that recovery does not come from old industries “bouncing back”, and that the low-carbon industries would be an important part of our growth story over the next 10 years. That was in his speech to the Institute for Public Policy Research on 1 December last year.

For every tonne of CO₂ emitted in producing insulation, 233 tonnes of CO₂ are saved, and, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said, for every tonne of CO₂ emitted in producing a wind turbine blade, 123 tonnes of CO₂ are saved. For every tonne of CO₂ emitted in the production of energy-saving tyres, 51 tonnes of CO₂ are saved—and so on, and so on. In the case of insulation, one year’s CO₂ emissions created producing insulation saves 2.4 billion tonnes of CO₂.

At the heart of the issue is the lack of understanding in the Treasury and DECC that these chemical companies cluster, as they always have done, and as they previously did within the large-scale set-ups of ICI. As NEPIC—the North East of England Process Industry Cluster—has proven in my region, locally produced products often feed on-site sister businesses or other company-owned plants. That integration produces better economies of scale, efficiency, profitability and technological development. It is regional clustering, as exemplified by NEPIC in north-east England, which was set up by One North East, that exemplifies industrially-led industrial activism. The Government’s carbon floor pricing policy, on the other hand, fragments industrial integrative clustering.

Unfortunately, the Government assume that secondary industries will not leave the UK, even if the primary chemical industries do. Indeed, the Secretary of State for Energy and Climate Change has said that

“quite a few of the high energy users have forms of natural protection like high transport costs so the impact is rather less than you might expect.”

Unfortunately, empirical evidence wholly contradicts the Government’s stance. As Jeremy Nicholson, director of the energy intensive users group has said:

“The idea that downstream industries are likely to remain here indefinitely if primary production goes might have a theoretical case but I’d say just look at the empirical evidence: downstream manufacturing thrives on co-location with primary industry and why would you expect that to cease in the future?”

Real life examples clearly show just how fragile downstream companies are. Let us consider Wilton, the former ICI site in the constituency of the hon. Member for Redcar (Ian Swales). The plants were balanced with the ICI ethylene cracker at the top of the production pyramid; as foreign ethylene became cheaper and producers produced offshore, the requirement for the cracker was reduced, leading to other plants downstream such as the Dow plant also being affected.

When Dow closed, 55 direct jobs were lost. That is not as big a media story as the events that unfolded at the mothballing of the Redcar blast furnace at the then Teesside Cast Products Corus plant, but the repercussions of Dow were just as profound. An estimated 2,500 jobs were lost downstream as a result of the closure of Dow’s ethylene oxide production plant—the only ethylene oxide plant in the UK. NEPIC has bounced back, bringing in other investments to Teesside, but it is acutely aware of the loss of primary chemical production and of lost opportunities for technological developments that could be made on Teesside, securing new green markets in turn.

More than this, however, the Secretary of State’s comments condone the loss of primary chemical production as a result of the carbon floor pricing while actually actively pursuing it. The question I must ask is: if industry flees within two years, as feared, how on earth will this carbon floor pricing levy taxation apply when the energy-intensive industry is no longer here? An industry cannot be taxed if it will not hang around to be taxed, which leaves Britain with neither the tax nor the industry.

As many primary raw chemicals are very expensive to transport and in some cases are banned from transportation, the Secretary of State’s relaxed approach appears uninformed. Many secondary production companies are small and medium-sized enterprises, often with fewer than 10 employees, and economies of scale for the transportation of such vast quantities of chemicals are just not viable, making the whole operation futile and highly costly for such small operations.

Amendment 12 would ensure that the Government look at the immediate impact of the provisions in the schedule on energy-using manufacturing industries and on employment in those industries; and at how the moneys raised by those measures will be used to mitigate the immediate impact of the schedule on consumers and on manufacturing industries and to encourage green investment. At the very least the Government must monitor and review their own policy and its consequences, which I fear will be devastating for energy-intensive industry and for my area of Teesside. A review will allow the Government to take stock.

Regional Development (North-East)

Debate between Ian Swales and Tom Blenkinsop

Tuesday 22nd March 2011 Westminster Hall

[Ian Swales]

I was about to come on to that matter. I thank the hon. Gentleman for his question. Absolutely, we need one regional voice on a number of issues. This Government perhaps differ from the previous Government in that we do not see the need for such an approach to be prescribed in detail for every region. I hope that the existing structures can make decisions, create what they think they need and make it work. If there are two LEPs in an area, the Government are not prescribing that they cannot talk to each other and say, “Okay, let’s jointly work on this.” A good example is European funding. The Government have already decided to retain a regional focus for European funding, because that is what is necessary.

[Tom Blenkinsop]

The hon. Gentleman is an excellent advocate for the region, and it has been a pleasure working with him on getting steel back to Teesside. However, there are some fundamental problems with the LEP structure. Let us consider, for example, Hitachi. As he has rightly mentioned, that is a great success story for the region. How will small and medium-sized enterprises in the Tees Valley LEP that want to grow around Hitachi, which is not in the Tees Valley LEP, interact with the new LEP, the North East Economic Partnership and the other structures?

[Ian Swales]

I thank the hon. Gentleman for mentioning that. Not everything happens through Government agencies. Business is business. If I were running a business, or if I wanted to run a business in the Tees valley, and I knew that a train manufacturing facility was being set up 10 miles away, I would not need a Government agency to lead me to talk to people and make things happen. We have suffered from the idea that people wait to be told what to do, and that is a good example.

[Tom Blenkinsop]

That still does not answer my point. If an SME wants to get regional growth fund funding, which LEPs does it talk to? Does it talk to both? Does it also talk to the NEEP, or does it talk to the Department for Business, Innovation and Skills and the Treasury directly? It seems that the need for further meetings will increase, rather than decrease.

[Ian Swales]

Okay. I will be more specific for the hon. Gentleman. Clearly, if a business wants to base itself in the Tees valley and has customers—wherever they are—it should talk to the Tees Valley LEP. If those customers happen to be in the region, that is fine. I do not see a problem with that. As I have said, there is no law that states people cannot talk to each other.

An almost religious adherence to the regions has had some benefits, but it has also created some problems. In 2004, the people of the north-east firmly rejected the idea of regional government. Some of us regretted that more than others, but the decision was absolutely overwhelming—not just from the fringes of the north-east but from the heartlands of Tyneside and Wearside.