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30 Apr 2008 : Column 129WH—continued

4.19 pm

The Parliamentary Under-Secretary of State for Transport (Mr. Tom Harris): I congratulate the hon. Member for Wellingborough (Mr. Bone) on securing the debate. Normally, I regard the debates in this Chamber as being slightly less partisan and political. On that note, I will try not to rise to the bait thrown by the hon. Gentleman—although I might not try particularly hard. He cleverly managed to get into a debate on the A14 and A45 a reference to the absence of a hospital in his area. I will not go down that path because I am sure that you would call me out of order, Mrs. Anderson, and rightly so. However, I hope that when he makes a press release of his comments in today’s debate, he will make it clear that no party in the House of Commons has pledged to provide enough money to the health service to build a new hospital in his area. I will return to that theme, but you will be relieved to hear, Mrs. Anderson, that I will do so only in relation to the general roads issue.

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Many hon. Members on both sides of the House have reservations and are disappointed that the regional transport boards in their areas have not prioritised schemes local to their constituencies. It is totally understandable that hon. Members in that situation feel disappointed. However, I return to the theme: no party in the House of Commons has suggested a change—well, perhaps the Liberals, but their economic policies are based largely on rainbows and pixie dust. No serious party has suggested any change at all in the level of funding that is allocated through the regional funding allocation.

That presents the hon. Members for Wellingborough and for Kettering (Mr. Hollobone) with a challenge. They talk about schemes that would undoubtedly improve the A45 and the A14, and it is perfectly acceptable and totally understandable that they wish to see improvements in that area. However, if they are disappointed that the regional transport board in their area has not given priority to those schemes and they believe that the schemes should indeed be prioritised before 2016, I think it was—of course, I would never think that they would be anything other than honest—I hope that, given that the pot is limited and will not be added to, they will suggest which other schemes that have been prioritised by the regional transport board in that region should be dropped to allow the schemes relating to the A14 and A45 to proceed.

Mr. Bone: I understand the argument that the Minister is making, and it would be perfectly reasonable and fair if it was not for the huge expansion imposed on the area by the Government. The Government said that we would have the infrastructure improvement necessary for those new homes, but we have not seen it. That is the difference between our area and other areas.

Mr. Harris: That is a perfectly valid concern and I will come on to it. Nevertheless, even allowing for the very significant housing growth planned for the area, we are still left with an accounting sheet with a balance of money that will not be added to by the present Government or any hypothetical future Conservative Government. Therefore, priorities have to be decided on and if one scheme goes into a different column, another scheme has to come out of that column. I understand the campaign that the hon. Gentleman is pursuing and it is perfectly understandable that he should do so. I am simply reminding him that money is not limitless and that no party is suggesting that that money will be added to. Therefore, serious decisions have to be taken, if not by him, certainly by the regional transport board, which is responsible for drawing up the priorities.

I hope that I can get most of my comments out of the way before the end of the debate, but of course I am happy to write to the hon. Gentlemen if I do not deal with some issues. I am aware that the hon. Member for Wellingborough participated in the recent Adjournment debate secured by the hon. Member for Kettering about consultation on housing developments and that he emphasised the link between developments and infrastructure. He will not be surprised this afternoon to hear me echo the points made by the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hartlepool (Mr. Wright), in closing that debate.

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Housing growth is one of the Government’s top three priorities, alongside education and health. We are building homes to meet the aspirations of this and future generations. We are proud of that; it is the right thing to do; and we make no apology for it. Housing supply has not kept pace with demand over decades, and affordability has worsened as a consequence.

Since 2001, housing growth numbers nationally have increased for new build by about 40 per cent. to about 185,000 homes every year. However, we need to do more, which is why my right hon. Friend the Prime Minister set a new target of delivering 240,000 homes a year by 2016. Of course, I recognise the provision of infrastructure as critical to the delivery of the Government targets for housing growth, not just to help to unlock the growth that we need, but to develop the sustainable communities that we all want. The importance of transport in accommodating growth is beyond doubt. I certainly do not dispute that.

Between 2001 and 2021, 101,000 new homes are planned to be built in Northamptonshire, with about 52,000 of those in north Northamptonshire; a rate of 2,600 completions a year on average. In addition to housing growth, the East Midlands regional spatial strategy sets a goal of 43,800 new jobs in north Northamptonshire by 2021. Clearly, those growth projections present significant challenges for transport, particularly the road network focused on the A14 and A45 trunk roads.

The two-lane dual carriageway A14 runs immediately south of Kettering and north of Wellingborough. It forms part of the trans-European network, linking the west midlands, M6, M1 and A1 with the container port of Felixstowe, and consequently it carries a large proportion of heavy goods vehicles. It also acts as a bypass for Kettering, which is one of its most congested sections, carrying 70,000 vehicles every day. The Kettering section has closely spaced junctions with other major road corridors, some of which share parts of the A14. Consequently, much of the congestion on the A14 round Kettering is caused by local traffic “junction hopping”. That section also has an above average number of accidents, as the hon. Member for Wellingborough said. The A45 trunk road is an important and busy south-west to north-east link between the M1 at Northampton and the A14 at Thrapston. Between the M1 and Stanwick, the A45 is a two-lane dual carriageway. Between Stanwick and the A14, it reverts to a single carriageway.

Let me make it clear that the Government are committed to ensuring that housing growth is accompanied by the infrastructure needed to deliver sustainable development at local level. However, I must stress that it is not necessary to provide that infrastructure in advance of the growth. It is necessary to ensure that the infrastructure goes with the growth, which is what we are doing. As the hon. Gentleman will know, north Northamptonshire has been the focus of considerable ministerial activity to that end. My hon. Friend the Member for South Thanet (Dr. Ladyman),
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when he was a Transport Minister, had a number of meetings with local partners to discuss the growth and infrastructure, and more recently my right hon. Friend the Minister of State, Department for Transport, visited the area to discuss the position. Those meetings have proved extremely valuable in progressing matters.

Since 2003, the Government have invested substantially in growth areas and growth points. Northamptonshire has been allocated more than £150 million in growth area funding. The hon. Gentleman’s portrayal of his constituency suggests that it is one of the poorest areas of the country and that it has been very hard done by when it comes to central Government spending. I suggest to him that that is not entirely accurate. My Department has provided £8 million of funding for the “Getting Northampton to Work” programme and is supporting the reinstatement of passenger rail services at Corby. We have invested £84 million in Northamptonshire through the local transport plan process over the past five years. In addition, we have approved schemes worth more than £21 million under round 1 of the community infrastructure fund. Those include the Corby northern orbital road and the Wilby Way roundabout improvement.

The A509 Isham bypass and the Corby link road are already included in our approved programme of major schemes, and the A509 Isham to Wellingborough improvement scheme is being considered for programme entry by the Department. There are also a number of schemes in the county that are the subject of expressions of interest for funding under round 2 of the community infrastructure fund.

Of course, investment alone will not provide sustainable communities. The emphasis must be on working with local and regional partners to ensure that policies and delivery plans are properly joined. To that end, we are working closely with the North Northants Development Company and its stakeholders to agree a package of interventions to deliver the planned growth in north Northamptonshire without compromising the trunk road and local road network.

However, I would not like to give the impression that we have only recently turned our attention to addressing the problems on the A14. Following the report of the London to south midlands multi-modal study in 2003, the then Secretary of State instructed the Highways Agency to work up a scheme to widen the Kettering bypass. A number of different options were assessed, but that work did not result in a viable solution being identified on either affordability or value for money grounds.

When that became apparent, the Department for Transport, the Department for Communities and Local Government, the Highways Agency, the Government office for the east midlands, Northamptonshire county council and other stakeholders formed a joint working steering group led by the North Northants Development Company. The group’s brief was to develop and agree a package of interventions to deliver the planned growth in north Northants without compromising that growth or the A14 and the local road network.

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Sports and Leisure Trusts (VAT)

4.30 pm

Mr. Brian H. Donohoe (Central Ayrshire) (Lab): I thank Mr. Speaker for selecting this debate. I also thank the Financial Secretary to the Treasury for her attendance this afternoon; I am sure that we will be given the answer to the problem that I am about to raise.

I am delighted to have secured a debate about VAT on the membership of sports and leisure trusts. It is an important issue, not only in my constituency but in the neighbouring constituency of my hon. Friend the Member for North Ayrshire and Arran (Ms Clark). It is also a problem across the entire country, both north and south of the border. There has been correspondence on the subject between my hon. Friends the Members for Pendle (Mr. Prentice) and for Eltham (Clive Efford) as well as my right hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr. Ingram). The topic is important also as a consequence of a recent report undertaken by Audit Scotland, which states that youngsters’ participation in sport is not likely to meet Government targets.

By way of background, the policy of Her Majesty’s Revenue and Customs is that unlimited access to all leisure facilities in a leisure centre, typically in return for a monthly or annual payment, is liable to VAT at the standard rate. North Ayrshire Leisure Ltd. is losing not only money, which is important, but membership over the issue. I am told that back payments—the policy is being applied retrospectively over the last three years—are £120, 000, and it has lost just under 100 members due to that imposition.

South Lanarkshire is in an even worse state. It could lose something in the order of £1 million. I understand from representations made to me that that is the average for the whole of the United Kingdom—tens of millions of pounds are being lost as a result of this application by HMRC.

Mr. James Gray (North Wiltshire) (Con): I warned the hon. Gentleman in advance that I intended to intervene, and I am grateful to him for giving way. He will, of course, be concerned about his local leisure trusts and the others that he has mentioned. However, private sector companies that run leisure centres have always paid VAT. Although one sympathises with North Ayrshire Leisure, it could be argued that it should pay VAT so that the private and the public sectors can compete equally.

Mr. Donohoe: I shall not get into a dialogue with the hon. Gentleman, but he is right to put sport at the very top of the agenda, as I do. I believe that incentives should be given to any organisation involved in trying to change the habits of a lifetime—of youngsters as well as adults—by moving towards any form of exercise.

Ms Katy Clark (North Ayrshire and Arran) (Lab): I congratulate my hon. Friend on securing this debate. He rightly said that the issue is of great consequence to both our constituencies. He has referred to North Ayrshire Leisure, which is in difficulties as a result of
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the change in policy. Does he agree that the public sector has been at the forefront in trying to expand participation in sport, particularly for those from deprived backgrounds? It is vital that we do everything we can to ensure that such public sector sporting facilities are as cheap as possible.

Mr. Donohoe: I accept that point. I hope that the Financial Secretary is listening. I hope now to make progress.

One of the main problems is that some services provided by leisure centres, such as sauna facilities, are subject to VAT. However, people who go for a swim and then a sauna should have some part of the charge exempted from VAT. I am told that that is not how the tax is applied. That is the nub of what I perceive to be the problem.

The taxman’s long-held view is that if an all-inclusive fee is charged that covers all the services provides by such a centre, it indicates a single supply for VAT purposes. For instance, a membership fee that entitles the member to use all the facilities within such a centre—I have one in my constituency; it is called the Magnum Leisure Centre—will attract VAT.

I started studying the system when I was requested to apply for this debate. It has become very bureaucratic. It is a labyrinth; it is almost impossible to establish the simple facts. Visitors to a leisure centre are charged for the services that they use; the exact VAT position of the service can then be taken into account. Customers who do not pay a membership fee are instead charged for the services used. If they swim, there will be no VAT to pay as it is exempt. However, if they want to use the sauna, VAT will be applied.

We need to take a common-sense approach, and I have known the Minister long enough to realise that she applies common sense. I therefore expect to get a sensible answer, so that we can bring the matter to a conclusion in the near future.

We are hosting the Olympic games in 2012, and north of the border we have the Commonwealth games in Glasgow in 2014. Those are two of the greatest sporting events in the world—except for the World cup, of course; we are not hosting it this time, but we hope to do so one day. It seems bizarre, in these circumstances, that we should be hampered in the sports field and are not able to promote sport because of the charging of VAT. It is having a severely detrimental effect.

I dispute the idea that any of the leisure services provided by leisure facilities should be deemed liable for VAT; I argue that they all have demonstrable sporting and educational benefits. The fact is that not-for-profit organisations such as North Ayrshire Leisure have the principal aim of increasing participation in leisure activities across all sectors of the local community, as my hon. Friend the Member for North Ayrshire and Arran mentioned. However, many people in the area are poor. I argue that a leisure trust should not have the burden of VAT placed upon it, as it will ultimately be passed on to the users of the facilities by way of extra charges or reduced investment. That will be to the detriment of the service.

The tax burden will have a profoundly negative impact on the future of hundreds of sports and leisure trusts across the country, which face significant financial
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uncertainty. In turn, that will harm affordable, accessible sports facilities for the community. While I have been a Member, the Government have been trying to promote healthier lifestyles. Given the wider health benefits of sport and leisure, HMRC’s current stance does not make too much sense.

I said earlier that a number of representations had been made to me. One of them was made by the Sports and Recreation Trust Association, a national organisation usually known as SpoRTA. It has been advised by PricewaterhouseCoopers and tax counsel that the way in which HMRC is seeking to charge VAT is wrong in law. HMRC’s decision to charge VAT retrospectively for some trusts may result in their liquidation. Indeed, in my constituency that is a severe threat. My fear, and that of my colleagues, is that that is a possible conclusion if the situation is allowed to develop. Higher membership fees at leisure centres would be necessary to cover the VAT liability, which could lead to a significant drop in participation, especially among those from poorer communities. That contradicts the Government’s aim of increasing participation in physical activity, and HMRC’s decision contradicts the Government’s efforts to promote healthier lifestyles.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I congratulate the hon. Gentleman on securing the debate and agree with everything that he has said. Would he go further and say that HMRC’s position—it is not only to seek to apply VAT but to backdate payments, as a result of the test case against the Highland Council in my constituency—makes matters a great deal worse for the leisure trusts? They would have to meet that call and pay HMRC back as well as their ongoing tax liability.

Mr. Donohoe: That issue has been raised. I have a letter to suggest that HMRC is willing to extend the period over which the charge can be spread. However, I do not think that that is the answer by any stretch of the imagination. I believe that the back charge must be waived, given that there was a sincerely held view that leisure facilities would not be subjected to VAT in the first place. There was no guidance from anybody within the Treasury or HMRC. The hon. Gentleman made an important point, and the Minister should look seriously at waiving that back payment wherever possible.

The matter needs urgently to be addressed. It requires the Minister to go and bang a few heads together in the Treasury. I know that she is good at that, having made representations to her in the past on other issues. She has gone in and solved the problems to everybody’s advantage. The matter must be addressed and resolved—it cannot be left in limbo as it has been. I plead with her to take the simple route and apply a bit of common sense to the problem.

Mr. Gray rose—

Janet Anderson (in the Chair): Order. The hon. Gentleman did not indicate to me prior to the debate that he would like to make a speech, but with the permission of the hon. Member for Central Ayrshire (Mr. Donohoe) and the Minister, I would be happy to allow him to make a brief contribution.

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Mr. Donohoe: I will happy if the hon. Gentleman wants to intervene on the Minister, but not if he wants to make a speech. I want to hear from the Minister.

Janet Anderson (in the Chair): I accept what the hon. Gentleman says and I call Jane Kennedy.

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