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PA's PA 16th December 2016

PA's PA 16th December 2016

PLEASE NOTE: This is the last PA’s PA for 2016 and when we return in 2017 this newsletter will be for PA members only.  Thank you to all our readers over the past few years. If you are a publisher who is not a member of the PA and would like to continue receiving our weekly roundup of political intelligence and activity details of how to join the PA can be found here

Welcome to this week’s PA’s PA, in a week in which the Syrian government reclaimed control over the rebel held eastern part of Aleppo, following what the United Nations termed as a “complete meltdown of humanity” in the city. An operation to evacuate civilians and fighters is now underway. Meanwhile in domestic politics the theme of the week was strikes, with train drivers bringing the Southern network to a halt over safety fears over driver-only-operated trains, Post Office workers planning five days of action in the run-up to Christmas and the British Airways crew also voting for a strike at Heathrow over the holiday period.

In this week’s issue:

VAT on colouring books

HMRC has published updated guidance on the VAT treatment of colouring books.  This is something the PA has been discussing with HMRC for some time and welcome the constructive manner in which that consultation was undertaken which led to the guidance that has been published.  The solution proposed is a very positive outcome for publishers, booksellers and consumers, and will ensure that the vast majority of colouring books remain free from VAT.  In summary:

  • From April 2017 all colouring books will be      zero-rated other than those which have content deemed as being only      suitable for adults (Profane/Pornographic/Illegal Acts/Violent) or are      advertised or held out for sale as being for ‘adults’ or ‘grown      up’s'.
  • For sales of colouring books sold prior to April 2017 the only colouring books deemed to be subject to VAT will be those which would never have qualified for the zero-rate because of their content (as described by the four criteria above)
  • No action will be taken over sales of books already made and up until 1 April 2017 which were advertised or held out to sale as being for ‘adults’ or ‘grown ups’.  I believe this will mean that 99% of books sold will have qualified for the zero-rate that were sold previously. It also means that publishers and retailers can sell any back stock they have up until that April 2017 without being subject to the new VAT rules. 
  • In the Revenue & Customs Brief, it explains what will happen to those suppliers who have already paid VAT on these books and how they can reclaim tax where applicable.
  • In addition, those publishers who have had decisions made or assessments raised will now have them withdrawn or reissued in-line with the Revenue & Customs Brief. 

School funding pressures

A new national funding formula, designed to resolve “unfair” and “inconsistent” funding levels, was announced this week by Education Secretary Justine Greening, which will see schools in big cities losing out while budgets for schools in the regions grow. According to TES, the formula will see 10,740 schools gain, while 9,128 will lose. Greening told MPs: “The proposals for funding reform will mean that all schools and local areas will now receive a consistent and a fair share of the schools budget so that they can have the best possible chance to give every child the opportunity to reach their full potential. Once implemented the formula will mean that wherever a family lives in England, their children will attract a similar level of funding, and one that properly reflects their needs.”

The report came on the same day a National Audit Office report was release, which said that schools are could be facing £3 billion worth of cuts by 2019-20. The NAO said that schools face a 8% real term reduction in funding per pupil because of cost pressures, such as pay rises and higher employer contributions to national insurance the teacher’s pension scheme. It expects schools will need to make £1.3 billion of savings through better procurement and £1.7 billion from using staff more efficiently.

Further analysis of CIPFA report

As reported in last week’s PA’s PA, the latest CIPFA report showed funding for local libraries falling by £25m.  Library campaigner Tim Coates has conducted further analysis which he has shared with The Bookseller.  This shows that book spend for libraries in England has fallen by £35m since 2005, from £80m to £45m, and that book lending to adults has fallen from 200m loans to 127m in the past five years, a drop of 36.5%, and from 94.6m to 78.6m loans for children, down 21%.   According to his calculations, electronic items took 18% of the money spent on books, but only produced 1.3% of the total book loans. Coates told the Bookseller that the figures showed libraries need to be stocked with up-to-date and relevant collections. He said: “There has to be an initiative so that what children find reflects the wondrous writing of the last 25 years. If we don’t do these things urgently this year the whole service will soon end in sad misery”.

UNESCO study on textbooks

The United Nations Educational, Scientific and Cultural Organisation have released a study on the content of school books around the world. The report says that “few instruments shape children’s and young people’s minds more powerfully than the teaching and learning materials used in schools”. It adds that textbooks determine how and what teachers teach in most class rooms, and are the first and sometimes the only books a young person may read. However the report warned that outdated textbooks can put sustainable development at risk, with secondary school textbooks from the 1950s and 2011 missing or misrepresenting key priorities. The report showed that the percentage of textbooks mentioning human rights increased from 28% to 50% between 1970-79 and 2000-2011, but coverage was lowest in Northern Africa and Western Asia at 36% in 2000-2011, up 14% from the previous period.

It said that governments need to reassess their textbooks to ensure they reflect core values for sustainable development, including human rights, gender equality, environmental concern, global citizenship and peace and conflict resolution. Aaron Benavot, Director of the GEM Report UNESCO, said: “Textbook revision is infrequent, and often involves slight revisions, rather than overhauls of content. In addition, governments simply don’t realize just how out of touch their textbooks are. Our research shows that they must take a much closer look at what children and adolescents are being taught.” The report called on governments to urgently review the content of their textbooks to ensure values are in line with the principles of the UN Sustainable Development agenda.

House of Lords report on trade after Brexit

A report on Brexit from two House of Lords committees has concluded that a free trade agreement would be the most “flexible option” for the UK once it leaves the EU, while remaining in the European Economic Area would be the least disruptive option for trade. However it said that a free trade agreement would be complicated to negotiate and that remaining in the EEA would be unlikely to enable the UK to limit the free movement of people or to give it voting rights on legislation. The report published this week was based on inquiries by the House of Lords Internal Market and External Affairs Sub-Committees. The Publishers Association responded to the inquiry from the House of Lords Internal Mark Sub Committee, which focused on the impact of Brexit on non-financial services.

The report also said that the Government “urgently” needs to decide whether or not the UK will remain in the customs union with the EU and urged the government to agree a transitional trade agreement, noting that a bespoke agreement, the current option favoured by the government, would take longer than two years to negotiate. The peers warned that trading under the World Trade Organisation (WTO) rules would have the most dramatic effect on trade, resulting in significant tariffs for goods and increased restrictions on services. Lord Whitty, chair of the EU Internal Affairs Sub-Committee said: “Trade-offs will need to be made in whatever trading framework we eventually agree. The Government is committed to curbing the free movement of people and the reach of the European Court of Justice. This is incompatible with full Single Market membership. While an FTA would provide the greatest flexibility, and no commitment to freedom of movement, there is no evidence that it could provide trade on terms equivalent to membership of the Single Market.”

Creative Access funding

The government has withdrawn more than £2m worth of funding from diversity charity Creative Access, which provides young black and ethnic minority people with paid training opportunities in creative and media companies. The charity had placed more than 700 interns with over 270 companies. The Department for Business, Innovation and Skills provided around 30% of the charity’s funding, including about £800,000 a year for staff overheads at Creative Access, and £1.8m for grants to cover up to 40% of the cost of employing an intern. But this June responsibility for apprenticeships was moved in the Department of Education, which last week informed the charity that it would no longer continue to fund its work as it was focusing on apprenticeships. Cultural Access has said it is facing closure following the decision. A petition has been launched to save the charity, which has secured over 2,500 signatures.

Explaining the move, a Department for Education spokesperson said that while “Creative Access is doing important work” it needed to ensure “funding is focused on making the most difference to the people who need support”. The spokesman added: “That’s why we have committed to increasing the proportion of black and ethnic minority apprenticeship starts by 20% by 2020.  We’re giving extra money to employers who take on 16-18 year olds, care leavers and apprentices with disabilities and we’ve established National Colleges for Creative and Cultural Industries and Digital Skills.”

Culture committee on arts funding

The Culture, Media and Sport Select Committee has urged the Government to do more to address the imbalance in arts funding between London and the rest of the country. The committee said there should be a “better regional balance” in grants, with prioritisation of funding for the arts where it still has the most impact. It said that further cuts, on top of a 20% reduction in spending by local authorities in England between 2010 and 2015, would have the biggest impact on spending on culture where the cultural offering is already weak. The committee also warned that budget cuts are making culture less accessible. Damian Collins MP, chair of the committee, said: “We welcome the recent further shift in Arts Council funding to provide more resources for regional arts organisation but there should be greater incentives in place to encourage more private and corporate support for culture. Our major national cultural institutions are doing more than ever to develop partnerships outside of London, to make the arts and heritage more accessible. We need to build on this, and make successful cultural partnerships a condition of the large grant funding that our large museums and galleries receive."

And finally…

Many congratulations to our chief executive, Stephen and his partner Laura, on the arrival of his first child, Matilda! 

This week we have:

Discussed the implications of the CJEU ruling on elending with DCMS; met with the Department for International Trade; discussed plans for 2017 with the Creative Industries Federation; met with the Academic Book of the Future strategy board.

Next week we will be:

Getting ready for Christmas and planning for 2017