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Cider duty tax break, pothole cash and air link subsidy for West

By GDemianyk  |  Posted: March 20, 2014

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Measures to get the storm-battered South West economy back on its feet – including a tax break for the cider industry – were at the heart of George Osborne’s Budget.

Meanwhile, the Government last night confirmed a four-year subsidy for Cornwall’s only airport to link to London, whose importance was underlined as the region’s rail line was destroyed by storms at Dawlish.

Duty on cider has been frozen and the automatic tax rise mechanism that slapped an extra 2% plus inflation on the Westcountry tipple has been axed.

The freeze means a 2p duty increase on a litre of cider from April has been halted – good news for cider drinkers but also hundreds of farmers and producers battered by storms.

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In the Commons, Mr Osborne acknowledged the point, telling MPs: “With some cider makers in the Westcountry hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider.”

Meanwhile, an extra £140 million of extra funding was confirmed to repair flood defences that have suffered damage in the recent severe weather, which battered much of the peninsula.

In the South West, the money will go to repairs of the Mermaid Wall breakwater on the Isles of Scilly, fixing the Looe harbour wall in South East Cornwall and rebuilding the town beach in Christchurch, Dorset.

Further, councils will get to bid for another £200 million to repair potholes, an ongoing problem in Cornwall, Devon and Somerset made worse by the storms.

South West Liberal Democrat MEP Sir Graham Watson said cider brewers, pubs and other local businesses have been “badly knocked by the winter’s storms and floods”.

“Apple orchards across the Somerset Levels and the South West have suffered serious damage from the excess water,” he said.

“The food and drink industry is a vital component of the South West’s economy. The pub trade alone adds over £2 billion to the region and employs nearly 100,000 people. This is not just about drink – it is about local jobs.”

Joe Healey, commercial director of Truro-based Healeys Cyder, which produces Cornish Rattler, said: “Consumer spending is being squeezed with inflation growing faster than wages, so it’s just being realistic that people don’t have as much to spend on luxuries.

“For people to be able to come down to Cornwall for their holiday and be able to enjoy a more affordable pint is great news.”

Professor Stephen Glaister, director of the RAC Foundation, welcomed the extra money for potholes but warned the “drip, drip of funding does not address the £10 billion road maintenance backlog that councils themselves have identified”.

He said: “It is also disappointing that this money has to be bid for. This creates a bureaucratic burden and means not all councils and drivers will see the benefits.”

Even before this year’s storms, councils in the region were facing a repair bill of close to £1 billion.

Meanwhile, Chief Secretary to the Treasury Danny Alexander has confirmed the Government will provide a financial guarantee that will go towards safeguarding of the Newquay to London air link for the next four years.

The funding commitment, via a public service obligation (PSO), which could be worth up to £20 million, is seen as crucial by councillors and politicians in securing the future of an air link to the capital, which was thrown in to jeopardy after Flybe announced last March it would terminate its service.

Cornwall Council is preparing to tender for a new operator for the service from April 2014. The commitment will see the funding extending beyond the lifetime of the current parliament, which is seen as being a valuable asset when the bidding process begins.

Adam Paynter, the council’s cabinet member for partnerships, said: “The Government’s decision to provide a financial guarantee for the full four-year period means that we can push ahead with the tendering process and ensure that the new service is in place by the autumn.”

The confirmation came as the Chancellor announced a £20 million fund to underwrite new routes from regional airports, including Newquay and Exeter.

Stephen Gilbert, Liberal Democrat MP for St Austell and Newquay, said: “This news follows months of lobbying, letters and meetings with ministers and officials at the Treasury and Department for Transport and comes hot on the heels of other measures announced in the budget that will see further support for Newquay Airport for many years to come.”

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