Monday, 5 August 2013

Danny Alexander accused of protecting constituency from austerity

By Kiran Stacey, Political Correspondent, Financial Times

Treasury chief secretary Danny Alexander has been accused of protecting his own constituency from the austerity that the coalition is enforcing elsewhere in the country. The Liberal Democrat has helped ensure that his Highland constituency has benefited from tens of millions of pounds’ worth of government help since he became chief secretary. Opponents say that amounts to pork barrel politics.

A Financial Times’ investigation has found many examples of public support for schemes and projects helping Mr Alexander’s Inverness seat, where Labour is expected to mount a strong challenge at the 2015 election. They include funding for a tourist railway, a bailout for the London-Scotland sleeper train, tax breaks for ski lifts and a generous allocation from the pot to fund exemptions from the so-called “bedroom tax”.

Labour attacked the cabinet minister on Sunday for protecting his own seat from the effects of austerity being felt elsewhere. Chris Leslie, Labour’s shadow financial secretary to the Treasury, said: “This is very fishy indeed. It seems to be more than a coincidence that, at a time of austerity, funding has gone from the Treasury to so many specific projects that just happen to benefit Danny Alexander’s constituency. The chief secretary seems to be happy pushing through deep tax rises and spending cuts across the rest of the country, so long as his backyard is protected.”

Treasury money has been put into pots that directly benefit Mr Alexander’s local area twice in the past week. The first was the fund given to councils to allow them to exempt some residents from paying the so-called bedroom tax. Highland council, which represents an area whose three MPs are all Liberal Democrats, received £735,000 from the fund aimed at rural authorities, equivalent to 15 per cent of the total pot, which was shared among 21 councils. The next highest award was to Aberdeenshire, which received £412,000.

David Alston, Liberal Democrat deputy leader of Highland council, made it clear Mr Alexander had played a personal role in the allocation. Mr Alston told his local paper: “This 400 per cent increase in support follows our meetings with Highland MPs Danny Alexander, John Thurso and Charles Kennedy.”

In the second case, Mr Alexander said he wanted to extend a fuel rebate scheme for people living on British islands to remote inland areas, including the Highlands, despite concerns that this might break EU rules. The two incidents continue a pattern of Treasury giveaways for Inverness and the Highlands since the coalition took power.

The government last year announced an extra £32m for superfast broadband in rural areas in Scotland. Another example was found in the 2012 Budget, which included a 5 per cent rate of value added tax for “cable-based transport systems carrying fewer than 10 people”. The ski lifts taking passengers up the Cairngorm mountain near Inverness were one of the few recipients of this tax break. Mr Leslie said: “When everyone else is paying higher VAT, is it really a priority to give a big VAT cut to ski-lift operators?”

A tourist train running up the same mountain also benefited in 2011 when the Treasury exempted any “non-public service rail operators” from the climate change levy, despite concerns that this might break EU state aid rules. One Whitehall official said the Cairngorm tourist train had been the only project which fitted that definition. In the same year, the government also pledged £50m to save the overnight sleeper train from London to Scotland, which terminates at Inverness.

The Treasury said: “It is right that the government recognises the significant challenges for those living in rural communities up and down the country and does what it can to support them.” A senior Liberal Democrat said: “This is the pay-off. Danny is loyal to George [Osborne, the chancellor], and this is what he gets in return.”

Financial Times