15/01/2012 Sunday Politics North East and Cumbria

Here in the North-East and Cumbria: The Government has called for a

freeze on council tax, so why will some people be facing bigger bills

Apology for the loss of subtitles for 1690 seconds

A warm welcome to Sunday Politics and the North-East and Cumbria. You

look vaguely familiar. Coming up a little later: will you be paying

more council tax this year? Ministers say bills should be

frozen, but not all our local authorities are prepared to toe the

line. We will try to find out why later. With me here in the studio

to chew over that and the rest of the week's events are my guests,

the Newcastle MP Nick Brown, and Stockton's James Wharton. Welcome

to you both. I hope you like the stylish new surroundings.

Now, we start with a question - should council workers, nurses and

teachers be paid more or less depending on where they live? The

Government has set up a review to look at just that issue. But trade

unions and many Labour MPs have promised to fight any move to end

national pay bargaining. They say the result would inevitably lead to

cuts in public sector wages here in the North-East and Cumbria, where

the cost of living is lower. I will be getting reaction from the TUC in

a moment. First though, let's hear from the North East Chamber of

Commerce which can see potential benefits in the idea.

I know of one business that was paying somebody not a great wage -

in the late 20s, for doing a very similar job, but actually they

found the public sector were paying in the high twenties. At that level,

that is a significant differential, and it is such a major cost. We

look at all of our costs. It is different when you're competing for

your products on the global stage, and competing for your wages on a

regional stage. In some cases, we are competing directly with the

public sector, and it is proving really difficult to attract quality

staff. We know that cost of living in the north-east is 9% lower than

it is across the average of the UK. That means it is probably 15% or

more lower than it is living in central London. There has always

been a waiting for central London, but not necessarily for across the

rest of the UK. The private sector has acknowledge that because that

is why it often takes advantage of the ability of a real -- really

skilled work force, that they can get at a rate that allows them to

compete globally. It will certainly be worth the Government looking at

the value of dinner to cross the public sector as well.

The North-East Chamber of Commerce there. Well, I suspect the unions

don't share that view. With me is Neil Foster, policy and campaigns

officer at the Northern TUC. It is pretty well if -- established

that the cost of living is lower here, so wouldn't it be fairer to

pay public sector workers in the South more than up here? We believe

that we need to look for like-for- like comparisons, and it is not to

make a comparison between public and private sector jobs, but to

look at real jobs that are doing the same jobs with the same skills

and experience. We think it is not fair that in one area they should

be paid more than here in the north-east. We do think that it

would have a negative effect on our region. It would be the motivating

for many public sector workers to see colics miles away down the road

being paid more. -- colleagues. Could you not what is your benefit?

If you paid public sector workers less, then when the cuts come in

you don't have to make as many redundant. Unfortunately it would

work like that. But that's what happens in the pub -- private

sector, isn't it? The private sector often has a national pay

bargaining as well where it has got large sites across the country -

they do it because they know that to have local pay bargaining is

costly and complex. So, we believe that maintaining national pay

bargaining is fair, but it was also a good for our region because it

means we have more money to flush around which also benefits the

private sector. If you take �500 million away from the region's pay

packets, that would be devastating for north-eastern retailers. We had

an argument that private sectors can't recruit and that is holding

back their expansion. There has never been more unemployment in the

north-east than in the last decade, so it means that private sector can

recruit from more people than ever before. Using 2000 public sector

workers as a result of cuts every month. -- we are losing. Somehow,

social workers and paramedics who are paid �2,000 less is not an

argument that holds. Backley. Let's put it to our MPs. James Wharton,

is this a good idea? Can you explain why it is? The key point is

that there are arguments on both sides, which is why what the

Government is doing is reviewing this. They have said they want to

have an independent review to get the idea about the impact of the

positives and negatives before going forward. We need to ensure

that if there are positive that we find weights do realise those and

enjoy the benefits, but negatives are taken into account. What is

your gut instinct at the moment? The government is saying this is

not about saving money but about boosting the economy. As Neil

Foster says, you are cutting incomes. The argument is it that if

you are a young people in a region where public sector pay is

significantly higher than private sector pay, when you're looking for

employment, you would be more likely to look at public sector

jobs, which makes sense, but can damage the private sector because

you are in sent advising people not to work in the private sector but

in the public sector. At the same time, that also means there is a

lot of money being spent in the economy which might not otherwise

be there. The Government is looking into it, and that is the

appropriate thing to do. We do want to rush into a decision that could

have a major impact on people's lives. Nick Brown, labour induced

this idea when they were in offers. This is destructive nonsense. It is

not a good idea for our region. The key argument that is advanced for

it is that public sector wage rates somehow stop people working in the

private sector. Let me say this directly to James Ramsbottom - if

he gives me the anonymous example he was quitting, I will arrange for

the Department of work and pensions do send a large number of

applicants for that job. Our problem is not having jobs that

employers cannot fail, the problem in our region is steadily rising

unemployment. But there is a., isn't there? If you lower wage

rates generally, then there is a possibility that more private

sector employers - a might even make sense to move jobs out of

London to the north-east. We are trying to drive up standards of

living in our region. We want to be more prosperous and have the

standard of living that people in London and the south-east enjoy.

Cutting people's wages will not achieve that. Do we? I think we do.

Actually, they have a lot higher living costs. When people move up

here for a better standard of living... It is true that if you

are on a decent salary you can have a better standard of living here in

the north-east of England. It is a great place to live, but cutting

wages will not make it better. It seems completely unfair that people

should be paid a different rate for doing the same job just because

they live in different parts of the country. It is important to said

that nobody is talking about cutting people's wages. That is

quite emotive and dangers will stop we are having a review into it. In

certain areas, this was introduced by the previous government. This

government has said that we should look at the impact this has had or

could have, have a thorough investigation into what that could

mean, before we take it any further. But the suspicion of public sector

workers is that this is about cutting pay, isn't it? This is the

next big thing. It is important to tackle but because that is not what

has been announced. What has been announced is a review into a

process that was started under the last Labour government. This

government have said wait a minute, let's have a look and understand

what this means, what the impact is. As we have had already, there are

strong arguments on both sides. now, thank you.

Now, the Government wants to see council tax frozen, and it is

offering a cash reward to local authorities which agree to do just

that. Yet, a survey by Sunday Politics suggests several councils

in the North are preparing to ignore that request and put bills

up. If they don't, they say they would just have to fill a funding

black hole in the future. Here's our Cumbria reporter Emily Unia.

And balancing the household budgets. This working mother of three is

tackling the January bills, and the possibility that council tax might

not go up this April is a welcome prospect. I think it is fantastic.

Our bills are all going up. The gas, electricity - everything is going

up, and not just in small amounts, it is going up in large amounts.

Salaries are not necessarily keeping pace with that. We have got

a larger outgoings, income not necessarily matching our outgoings.

If the council tax, which is one huge bill each month, can be frozen,

then that is great. And this is where some of her council tax is

spent. The spark is run by Carlisle City Council. The decision to

freeze council tax again this year means they qualify for a government

grant. We feel it is important in the economic climate that at

residents are facing that we don't burden them unnecessarily with

council tax. Carlisle City Council will be freezing the council tax

for our residents and we are pleased that we can work with the

governed in doing that. We would have been looking to do that anyway.

So, how many of our local authorities will follow this

example? Sunday Politics had discovered that, although none have

yet voted on a final budget, 10 said they are planning to freeze

council tax. 10 are not decided, but for will definitely go up. That

is Middlesbrough, Darlington, Stockton and Redcar and Cleveland.

The problem facing councils it's the cash reward beget for freezing

the tax only lasts one year, which means that next year, they either

have to raise council tax by even more, or make deeper cuts. If it

were to take it we would have to produce more jobs, cut frontline

services, and fingers crossed we have still got our 13 libraries

open. If we were to take this, this one of Grant, then we would be

looking at reducing our services, closing libraries. It would be

those will to facilities that get close. No council is proposing a

rise of more than 3.5%. Any increase above that figure would

trigger a local referendum on the issue. But why not give councils

the freedom to choose what they think is best for local services?

We believe in localism - a combination of local

representatives, elections and the involvement of local people in

those decisions. Where councils want to make substantial increases

in council tax it is vital that they get the endorsement of local

people. How they do that is through a local referendum. For Nicola, a

council tax freeze would ease the pressure on household finances. But,

for those lung -- running local government, it is more of a gamble

with no guarantee that government grants will continue into future

years, those that don't increase the tax now, could be left with a

gap in funding in future. Nick Brown, let's congratulate Eric

Pickles on helping councils like Newcastle, for instance, which will

raise the council tax. Yes, and that is a brave decision for them

to make. I support them in the decision they have made. But Eric

Pickles is not helping as much as you seem to imply. Your programme

drew this out rather well. There was a 2.5% support payment for the

coming financial year, just as there was for this year. And then

it comes to an end, so the council will either have to make further

expenditure reductions or cover up the money that they have lost by

putting the council tax up just to stand still. Then presumably, there

would be need for a further increase to cover increased costs.

So they are in a difficult position indeed. I don't envy the

councillors with their problems. I think in Newcastle they have done

the right thing. The citizens we represent are under incredible

pressure and just cannot afford to have any of their bills put up.

it sounds as if they will lose services eventually. They are

losing services now. That is the effect of what the Government is

doing. Can you have any sympathy with that point of view of councils

who feel they have to look a little longer term than this one you offer.

Very little because the whole point of the policy was that we wanted to

freeze council tax for two years. Last year it was done with a long-

running grant, and this year it is proposed to be done with a grant

that comes in next year and pays for that council tax freeze that

year. In a Teesside alone that is worth �5 million. If councils

refuse this they are turning down that government grant, and they are

then taking that money out of people's pockets. It is avoidable.

What you make of the argument by one council who says this is not a

great deal because we get the money this year, but next to be have got

to find something to cut or put council tax up. It is a shop-soiled

offer - it is not as good as the of the last year. I don't think it is

a bad off at all. The offer would allow a council to Friis council

tax this year without being any worse off. They may have to put it

up the year after but it would be going up anyway. The point is, if

this was introduced... They are introducing a Finance Act which

limits the amount that councils can put up council tax up without

holding a referendum. If you want to put council tax up, let people

make a choice. Which council would be mad enough to put up by more

than three and a half %? I would love to have a referendum, but I

would not be put in council tax up at all. I would be taking the Friis

and helping people in the area that I represented to get through a

difficult economic times. The economy is tough. This is a measure

that will help people to meet their household bills at the time that

they most needed. But the issue here is that by withdrawing the

grant at the end of the financial year, the council - any local

authority will have to put council tax up by about 3% just to

standstill. If they go beyond 3.5% they will have to hold a referendum

under the terms of the new bill that has just been introduced in

the Commons in order to get support for that. That is a terrible

position to be in. It isn't, for one year we will pay the council

tax increase for you - central government will pay it so that

local people don't have to. And next year that increase comes in,

but then everyone is better off because for one year they had a

Friis. If it is a high increase, have a referendum. What a people

scared of, give them the choice? There is not a lot of fat to cut

out of council budgets, given all the pressures they have been under.

You are now effectively saying to local authorities that there are

some things they are going to have to stop doing. The victims of this

are going to be people that are being looked after - the elderly,

the people in care, and the vulnerable people. More from my

guests in a minute. First, Mark Denten has our regular round-up of

the political week here in the North-East and Cumbria, and he

doesn't believe in hanging around. He has done it in 60 seconds!

Seven Labour MPs have met to discuss their campaign to save

Durham Tees Valley airport. It has been put up for sale and MPs are

determined to keep it open. In Cumbria, the county council has

revealed plans to shut six and recycling centres, including this

one, and replace them with a mobile service. It says the plans could

save �2 million. Plenty of entertainment but few ball skills -

Richard Branson arrived in Newcastle to launch his new banking

empire following the Government's sale of Northern Rock to Virgin

Money. I thought I would come in and see if you were managing all

right. A more low-key welcome for the Bishop of Durham who took his

seat in House of Lords for the first time on Thursday. And finally,

Frank Cook - the MP for Stockton North - has died. Expert on defence

issues, he also had one of the more colourful backgrounds in Parliament

when he worked as a Butlins Redcoat. Best will to our MPs again. James

Wharton, you and other Teesside MPs met to discuss the future of the

airport. Is there any hope? company that owns it believes that

a buyer can be found. It has got a strong offer and we will have to

wait to see what happens. So far, the right messages are coming out

and everyone is working together to deliver a future for this important

infrastructure. One colleague said making a case for government

assistance this week. Is that realistic? It is early days. It has

just been put up for sale, we are waiting to see if there buyer comes

forward. If there are no buyers by the end of January we will look at

how the new round of bidding will be taken forward. I don't know what

sort of government assistance that would be looking for, and I suspect

it is not likely to be forthcoming if they wanted to be nationalised

or something like that. A future for the airport, yes, government

assistance - it would depend what was asked for. Nick Brown,

Newcastle has seen a drop in passenger numbers, too. Is there

room for two airports in the north- east? Yes, there is. When I was the

regional minister I spent a lot of time on the Teesside airport issue

and in particular on trying to secure a landing slots at Heathrow

for domestic flights, rather than see every vacant black and --

landing slots at Heathrow before what is the most profitable, which

is for long-haul flights. If there is anything I could do to support

James in his campaign to find a future for the Teesside airport and

I am more than willing to do it. Northern Rock - it was great to see

staff and customers enthused by Richard Branson this week. I think

we should all get behind the new owner and make things work for him.

He is an important corporate citizen in our region. People have

been saying it was sold too soon and for too little money. I have

been to record and what I have said and I have actually written asking

for a meeting because I could not get to the event on Monday. I would

like to see what we can do to take the project forward, and also to

support the Northern Rock Foundation, which is still in

existence. It is a shame in some ways. A buyer came forward, which

is probably going to deliver a secure future for it. There is a

place for corporate its, but in this case, we are in agreement.

have to leave it there. Thank you. And that's about all from us.

Remember, my blog is chock full of nutritious new year goodness,

including more on the regional pay idea. Do take a look and maybe send

me a comment about the new show. You can do something similar and

follow me day and night on Twitter. We are back next Sunday when Hexham