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Volume 561: debated on Wednesday 24 April 2013


Wednesday 24 April 2013


Communities and Local Government

Local Authority Funding (Derby)

The Petition of citizens of the United Kingdom,

Declares that they believe there has been a disproportionate impact of the Government’s austerity programme on Derby compared to other local authority areas and that the cumulative impact of the cuts being forced on Derby City Council will amount £75.77 per person compared to a few pounds in other more affluent parts of the country.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Communities and Local Government to ensure a fair deal for Derby by reducing the amount of cuts made to Derby City Council.

And the Petitioners remain, etc.—[Presented by Chris Williamson, Official Report, 28 November 2012; Vol. 554, c. 342 .]


Observations from the Secretary of State for Communities and Local Government:

Local government accounts for around a quarter of all public spending so it is only right that councils, including Derby, play their part in paying off the deficit left by the last Administration. Indeed, the last Administration’s March 2010 Budget was planning £52 billion of cuts over the Spending Review period—which would have included local government, which was not a protected area.

The Government have delivered a fair local government finance settlement for 2013-14, fair to north and south, fair to rural and urban, fair to shires and metropolitan areas.

Derby still has a spending power (including Public Health Grant) in 2013-14 of £849 per head, which is over £140 more per head than the £706 in Wokingham.

The petition dates from before the announcement of the 2013-14 local government settlement but even in 2012-13 Derby still had a formula grant (including police) allocation of £545 per head, which was higher than the England average of £525 per head.

This Government have also taken action to work with local councils to freeze council tax. Under the last Administration, council tax bills in Derby rose by 102%. In the last three years, council tax bills have only risen by 1.5%—a significant cut in real terms.

This is a fair deal for Derby’s local taxpayers.


VAT on toasted sandwiches

The Petition of employees and customers of Subway,

Declares that VAT is being charged on toasted subs and sandwiches, further that as a result, the sandwich shop industry, which employs tens of thousands of hard working people and supports thousands of small businesses, is now being placed under threat and that sandwich shop owners should be treated fairly.

The Petitioners therefore request that the House of Commons urges the Government to maintain its recent U-turn on pasties and additionally to remove or reduce the tax across the board, in line with our European neighbours.

And the Petitioners remain, etc.—[Presented by Mr John Leech, Official Report, 25 March 2013; Vol. 560, c. 1437.]


Observations from the Chancellor of the Exchequer, Treasury:

The Chancellor announced in Budget 2012 a number of budget measures designed to clarify or to address anomalies and loopholes in the VAT system. The clarifying measures included an amendment to ensure that all hot takeaway food is subject to VAT.

The new legislation was debated and approved by Parliament last year and included in the 2012 Finance Act. It came into effect from 1 October 2012. The legislation does not distinguish between different hot takeaway food products. Any food product that is heated to order for a customer, kept hot or marketed as hot, is liable to VAT at the standard rate. If it is left to cool naturally, it is not. Toasted sandwiches have been liable to VAT at the standard rate since 1984, and there is nothing in the new legislation that changes this.

This petition proposes removing or reducing VAT from hot takeaway food “across the board”. When the UK joined the European Community in 1973 we signed up to the general agreements that covered the application of VAT throughout the EC. Under these and successive agreements, we are allowed to keep our existing zero rates, but we may not extend the scope of our existing zero rate reliefs. Having excluded hot takeaway food from the scope of the zero rate in 1984, the UK cannot legally reinstate it.

Some EU Member States apply a reduced rate of VAT to restaurant and catering services, which is provided for in EU law. However, such a relief would necessarily go far wider than simply the treatment of toasted sandwiches, and would therefore come at a significant cost, which would have to be met either through increasing other types of tax or from increased public borrowing. Increasing borrowing would risk raising interest rates and undermining international confidence, which would damage the recovery and have an adverse impact on individuals, families and small businesses, including those in the hot takeaway food sector.

This Government do not plan to make any further changes to the legislation on hot takeaway food.