GEORGE Osborne’s autumn statement was met with a mixed response in South Tyneside.
The Chancellor announced hospices such as St Clare’s in Jarrow and air ambulance services, including the Great North Air Ambulance (GNAAS), will be able to reclaim VAT from April 1.
St Clare’s chief executive David Hall welcomed the announcement, saying it could be worth anywhere up to £30,000 to the hospice.
But a senior borough councillor said that while he welcomed the announcement of a business rates review, he feared continued spending cuts would hit local authorities hard.
Coun Ed Malcolm, lead member for resources and innovation at South Tyneside Council, said: “There are positives and negatives in the Autumn Statement.
“Overall, though, it isn’t what the Chancellor did say, but what he didn’t.
“The announcement of a business rates review and additional package of measures to boost bank lending to small and medium-sized businesses (SMEs) is welcomed and goes some way to helping local business.
“Here in South Tyneside we have been working hard to create the right environment for growth and job creation. Our support for Small and Medium Enterprises (SMEs) has seen over 800 new business start ups in 2014, our four local business centres are at over 80 per cent occupancy and the borough is undergoing the biggest programme of regeneration we have ever seen.
“The real issue of concern is how continued spending cuts will affect local services and the people of the borough.
“The Chancellor’s vision of a public spending surplus of £4bn by 2018-19 doesn’t in any way address what will be left of local government by then.
“He has not been able to reduce the deficit as he stated he would, and in turn has had to borrow more money to close the gap.
“The Chancellor’s inability to raise enough revenue is symptomatic of the low wage economy he has created, but if he continues to cut spending at the same levels over the next parliament, this will spell disaster for local services.”
Mr Hall is hopeful the decision to allow hospice charities to reclaim VAT will prove “fantastic” news.
He said: “On the face of it, this is a really good thing, because hospices pay VAT on a whole range of things.
“Potentially it could be somewhere around 20 or 30 thousand pounds, which would be fantastic.
“The devil is in the detail.”
Although the VAT rebate will apply only to the hospice’s charitable operations, and not the commercial arm which runs its fundraising shops, there was also good news in the form of a 50 per cent discount in business rates for shops next year.
“We pay business rates on our commercial premises, which are run through a limited company,” said Mr Hall.
“In the past, we have had additional support from South Tyneside Council, but that is now being phased out.
“We also have one shop in Gateshead, where we have not received the same level of relief, so to have our rate bill reduced would be very welcome for our income-generating activities.
“It is great that the independent hospice charities movement has been recognised in this way.
“It is an anomaly that NHS organisations don’t have to pay VAT while charities do. If this creates a level playing field, that would be an excellent thing.”
GNASS chief executive Grahame Pickering said: “Raising the money to keep our helicopters flying is a constant uphill battle, so today’s news is potentially a tremendous boost at a time when the demands upon our service are as great as ever.
“Any relief will directly benefit residents of our region, but that doesn’t mean we can let up on our fundraising efforts as we need to raise around £5m every year to keep flying.”
North East Chamber of Commerce (NECC) Director of Policy Ross Smith said: “The announced business rates review must be a serious review with no options off the table.
“What we have at the moment is a broken system in need of radical and rapid reform.
“I can assure the Chancellor that he does not need to ask NECC to engage with him, as this is something we have been campaigning for many years.
“We have already had one limited review on business rates this year and our members will hope to see something more meaningful this time around – especially given the Chancellor confirmed further increases in the rates during today’s statement which will be bitterly disappointing for many businesses.”