Council leader Nick Forbes stood and gave his 4th budget speech to full council on March 4TH 2015. He gave a damning assessment of the Lib Dem supported Tory Governments’ ideological and politically led cuts to Newcastle, while also showing a vision of hope and caring for Newcastle.
INTRODUCTION
This is my fourth budget speech as leader of the city council.
You might expect that they get easier over time. But let me tell you that’s far from the case.
The decisions we have to take get tougher every year.
Despite the political divide in this chamber tonight, I believe that deep down we are all connected:
If there is an elderly person too frail to care for themselves, it matters to us all;
If there is a family that can’t get the support they need to care for a disabled relative, it matters to us all;
If there is a child growing up in poverty, or at risk of exploitation, it matters to us all.
But let me warn you: without a fundamental change of direction at national level, we may not even be half way through this era of austerity. Some warn that we may be only 30% through the cuts that are planned for our country’s public services.
The last 5 years have presented unprecedented challenges. We’ve done everything we can to protect the people of this city from a political strategy to run the region down, to divert resources elsewhere, to persist with cuts to public services which go well beyond those necessary to reduce the government’s deficit.
This cannot continue. We will not stand for it, and I intend to use this speech tonight to set out why as a council we will not stand for it, and more importantly what we are doing about it, as we deliver a fourth budget for the city.
FINANCIAL CONTEXT
Councils have been hit harder than virtually any other part of the public sector by cuts, and places like Newcastle have been disproportionately hit harder still.
The Government’s claim that they are being fair to all councils is a fraud, and this has been proven by our very own research – our heat maps. An analysis that has been echoed independently by the Joseph Rowntree Foundation, the National Audit Office, and the Chartered Institute of Public Finance and Accountancy.
We can now for the first time look at the record over the full five years of this coalition government.
We can reveal the facts which the government has done so much to try to hide – with their spin and misinformation:
- £650 million has been transferred from the North of England to the South
- The North East of England – hardest hit of any region – has suffered more than £557 million in cuts, £165 million more than if the cuts had been divided equally
- The councils serving the most deprived areas of England have suffered cuts of up to £400 per person, while some of the least deprived districts in the southern shire counties have instead seen increases of up to £14 per person.
- Newcastle’s cut is more than double the national average – £266 per person compared to £130 per person.
- In the most recent settlement, the headline national average cut was 1.8% in Revenue Spending Power. Yet Newcastle had a cut in spending power of 4.9%, while Surrey had an INCREASE of 3.1%. In cash terms, this is a direct loss to Newcastle of £14.9m and a gain to Surrey of £25.7m.
Despite Eric Pickles crass attempt to imply otherwise, our unallocated reserves are modest: at 10.1m, equivalent to less than a week of our operational budget. To put it another way – the cuts we face next year alone are four times greater than the Council’s entire reserves. And he seems to forget that once those reserves are spent, they can’t be spent again, and we would be left with no safety net in the event of a major incident like flooding or a terrorist attack. Suggesting councils should use reserves is a red herring to mask the scale of the cuts that local authorities are facing.
I have consistently said in recent months that, if the local government cuts had been divided equally between all councils since 2010, this budget which I present to you here today would include £38m extra. I can now inform council that, as a result of the latest settlement, the amount by which our city has been shortchanged has risen to £39.6 million.
That would be enough to:
- Keep our streets and neighbourhoods clean and safe
- Repair our roads and pavements
- Maintain many much-loved local facilities and community venues
And much more.
So much for the claim that we’re all in this together, or that the funding settlement is fair to all parts of the country.
When you look at our heat maps, you can’t help but be struck by their uncanny resemblance to the map of Indices of Multiple Deprivation. This proves that areas of greatest need have been hardest hit. But there’s another map they look like too – the political map of England. We have conclusively shown, Lord Mayor, that this Government is presiding over the wholesale shifting of resources from the North to the South, from deprived areas to affluent areas, and from urban areas to leafy shires.
To me, that is vicious, ruthless and heartless when families in this city, and other parts of the country, are living every day with real hardship.
Quite simply the burden of paying down the deficit is falling on the poorest parts of the country. That is morally and ethically wrong as well as entrenching the North / South divide.
And the awful irony is that the deficit hasn’t been reduced as expected. The Government has missed all its targets. All the pain, especially in places like Newcastle, but no clear gain. And what is their answer to the failure of austerity? We know this from George Osborne – well, it’s more austerity!
If this Government is re-elected in May they have pledged to not only continue with austerity but to increase it, with an additional £7 billion of tax cuts which can only be paid for by more public spending cuts.
And the independent Office of Budget Responsibility has warned that public spending levels would have to return to the 1930s as a proportion of GDP. That’s a time before the Welfare State, before comprehensive education or the NHS.
Well, tonight I have a message for George Osborne and David Cameron: you take the country back to the 1930s if you want to – Newcastle is not coming with you.
Instead, this council, with its partners, is creating a city fit for the 21st century; a modern, European city; where fairness is rooted in everything that we do; where we invest to create the jobs of the future; where we work together to protect the most vulnerable, and find creative new ways to deliver the services which the people of this city have the right to expect.
A LONG TERM VIEW / MITIGATING CUTS
Three years ago, Lord Mayor, we took an important decision in this Council chamber. We took the brave decision to plan ahead. To set out a three year budget which would give us the time we needed to prepare the city for the challenges we could see on the horizon. We chose long-termism over expediency; transparency over complacency; cooperation over imposition.
Three years ago I was accused by my critics – including some here tonight – of exaggerating the scale of the cuts. I was accused of scaremongering, and worse. People simply didn’t believe what was about to happen. But the passage of time has shown that if anything I was over optimistic. Sadly, the cuts have been far deeper than I predicted back then.
In 2012 I warned of fiscal cliffs – in adult services; in children’s services and environmental services. Well now we are staring over the precipice.
Over the last few years we have strained every sinew to find innovative ways of working, to do our best to avoid the destructive consequences, to keep pushing back from the cliff edge.
I want to thank members of the Overview and Scrutiny Committees for the constructive and insightful approach they have taken to examining all aspects of this budget. Their report draws important conclusions about the proposals we have put forward, and the Cabinet’s response shows support for many of those recommendations.
Most aspects of the budget we are considering today, for the 2015-16 financial year, have been consulted upon for the past 3 years. Many of the proposals set out in the documents are dramatically different as a result of that consultation.
Over the last three years we have managed to save all but one of our libraries from closure; we have kept leisure centres open by transferring them to a charity, and we have set up the Newcastle Cultural Investment Fund to continue supporting arts and culture.
We have worked with voluntary sector partners to come up with a new model of family support, structured around family hubs. These will incorporate Sure Start Childrens’ Centres with a range of family support services that will help children and young people aged 0 – 18 in our most disadvantaged neighbourhoods.
Our Supporting Families programme, bringing together partners to help families in need, is starting to demonstrate not only that we are helping people to stand on their own feet again, but also that it is an effective way of saving money across a range of agencies.
We are increasing enforcement activity against the minority of people who cause misery for the majority. Those who drop litter, allow their dogs to foul our pavements and parks, graffiti buildings or flytip rubbish will be pursued relentlessly and made to pay for their environmental crimes.
We are leading nationally on the reform and transformation of our public services. I lead on public sector reform in the Core Cities Cabinet – pushing for opportunities to join up services at local level, rather than continuing with poorly connected departmental programmes run from a desk in Whitehall. And our excellent and highly respected Chief Executive, Pat Ritchie, recently co-authored a radical set of proposals for public sector reform around the country that has been welcomed from across the political spectrum.
And there are many more examples of a transformational approach written through this budget.
Closer integration of our support for skills and employment – working with Newcastle College, our schools, and the voluntary and community sector to reduce the number of our young people not in employment, education or training.
Closer working with YHN, to deliver a better service for our tenants and their communities – and the lowest rent increase for nearly 2 decades.
Closer links with other councils in the North East. A new Combined Authority – one of only 5 across the country. And shared services through the North East Procurement Organisations – ably chaired by Councillor Dunn – delivering a rebate of over £1 million to North East councils in six months alone.
We have recently secured £2.75m from the Department for Education Innovation Fund to continue our innovative approach to children’s social work.
Yes, we are doing some amazing, ground breaking, nationally leading things here in Newcastle in the face of adversity. But let us not pretend that this energy and commitment will save all services under threat, that reform is a magic bullet to kill the effects of austerity, that what we have done so far can be sustained forever. We have no option but to set a balanced budget each year, and we will not shrink from the difficult decisions that are necessary in order to do so. But that means accepting that we have less money, and therefore the council will have to do less as a result.
It is a shame that the Opposition have no alternatives to put forward for debate this evening. It is easy to criticise, as I imagine they will do for the next few hours, but I look forward to hearing if they have any constructive proposals for how else we could manage the cuts being imposed by THEIR Government.
INVESTING IN THE FUTURE
Members will know that, although our revenue budget providing day to day services is under huge pressure, we still have a bold and ambitious capital programme for our city. This is one of the ways in which we can show confidence in the future in such dark times.
We said that we needed to invest during the depths of the recession; to give confidence and prepare Newcastle for recovery.
We are now beginning to see the fruits of that; at Central Station, at the Stephenson Quarter, at the North Bank of the Tyne, and on Science Central where we opened The Core – a building already 90 per cent let by businesses providing jobs for the future.
But the success of our capital programme is not only visible in the success of our city centre.
It’s also making a difference in communities across the city.
After all, investment in buildings is – to me – a means to an end. The outcomes have to be felt in the wellbeing of all our citizens: more and better jobs, better public services.
For example, extensive research with more than 650 victims of domestic violence showed the most important factor when a woman is fleeing her home is that she has somewhere safe to go.
So as part of our capital programme we plan to build a new modern refuge, with high quality support for victims, by spring next year.
We are also investing in new homes for vulnerable residents, helping them to stay independent and relieving costs that would otherwise fall on the council.
By helping a charity to convert a redundant church in Walker into 16 one-bedroom apartments, we have not only prevented an empty building becoming an eyesore, but also provided supported accommodation for people in a dementia-friendly neighbourhood.
And to help those primary schools which missed out when the Government scrapped its own capital investment programme, we have designed and funded our own scheme in collaboration with schools and governing bodies to help improve children’s learning environments.
We have already invested £4 million in eight schools to create additional teaching space, outdoor learning areas and small group space for children who need extra support. Speak to the Headteachers of Grange First School, Ravenswood Primary School, Hawthorn Primary School or Regent Farm First School, and they will tell you in glowing terms what a difference this is making to the quality of education provision. We want to continue this work, and I am delighted that the budget includes a commitment to spend a further £26.8m on upgrading school facilities, ensuring that children across the city have the very best quality education here.
And our investment isn’t just in buildings and infrastructure. It’s in people too.
When the Government scrapped Educational Maintenance Allowance, they created a huge hurdle for young people from poorer backgrounds to continue their education. It seems as though there’s a mindset from some of our national politicians that people should know their place, that if you’re from a poor family or area then you shouldn’t even bother trying. I’m proud that we managed to work with schools to create a replacement for EMA – a Newcastle Bursary Scheme – so that children with parents on low incomes can continue their studies. This is worth up to £1200 per year for each young person who qualifies. Education should be an opportunity for the many, not the few, and with progressive steps like this we are ensuring that all of our young people have a chance to succeed.
We were the first council in the North East to introduce a Living Wage. Now some sitting in this council chamber have opposed this move. They have argued that at a time of austerity we should be continuing to pay our staff at below the rate associated with a basic standard of living. But I believe that decent public services cannot be delivered by driving down pay to poverty levels. A Living Wage is recognition of the difficult, challenging tasks that many of our lowest paid workers – often women – do. It’s also a way, by giving people a little extra in their pay packets each month, of getting money into local businesses. By taking this step, we have set the standard for other employers within the city. And I’m proud that in this budget we make further progress on the Newcastle Living Wage. An increase to £7.75 an hour from 1st April and a commitment to increase the level to the national Living Wage within 2 years.
And we have a good story to tell about our investment in small businesses. 61% of the money that we spend through procured goods and services goes to businesses in the region. We’re firmly committed, using the principles of the Social Value Act, to support our local economy wherever possible. And to help small companies get online and grow their business, our award winning Go Digital Newcastle programme is providing free vouchers to access superfast broadband; 264 businesses have already signed up. Our visionary partnership with BT is bringing superfast broadband to over 97% of the city. Confidence in this relationship has led BT to go even further; trialling ultrafast broadband in Gosforth; one of only two places in the country to benefit from the latest innovation in technology. Broadband investment will see Newcastle become one of the best connected cities in Europe, and I am determined that everybody should have opportunities to make the most of our digital offer.
HEALTH AND PUBLIC HEALTH
Members will know that I have a longstanding personal commitment to improving public health, and making our health and social care system work better. It’s one of the ways we will tackle the deep-seated inequalities that scar our city. All eyes this week are on the devolutionary deal being offered to Greater Manchester, and I believe there is a new willingness in Newcastle to go further to bring health and care together. This will need fundamental reform and policy change from Government, and is likely to be one of the ‘big ticket’ items we deal with throughout the next Parliament.
In the meantime, however, we have a good track record of innovation.
By sharing and co-locating services with Newcastle Hospitals Trust, we have been able to save over £140,000 in the first three months by reducing hospital admissions.
Through the Better Care Fund we’ve secured £840,000 to support the implementation of the Care Act, and our record of working with partners on new initiatives helped us win £2.7m through the Transformation Challenge Award to support families and children with mental health needs.
In public health we are also innovators.
We were one of the first councils to truly understand that real drivers of good health lie beyond the scope of health care services. The best start in life, a secure, a well paid job, a warm dry home, a decent neighbourhood, a feeling of belonging – these are all part of our plan to improve the health and wellbeing of people across the city.
And now that public health responsibility has returned to where it belongs – with local authorities – we are even more focused on improving the health of all people in Newcastle.
We have started the process of rethinking our public health spending, and looking at how public health services can be better served through the wider actions of the council.
For example, our Cycling in the City campaign was hailed as a breath of fresh air by the campaign group Bike Hub. We are investing millions in new cycle networks, challenging the dominance of the motor car and creating safer routes for cyclists and pedestrians.
We have set about recruiting and supporting a network of Healthy Living Pharmacies across the city.
We are broadening the base of our health checks to include pharmacists and health trainers.
We are proposing to bring in-house the local health improvement team, so they can work more closely with staff across the whole range of council services.
We propose to tender Newcastle’s Stop Smoking Service with a view to establishing a better model of delivery with services that are more community-focused.
We are restructuring our drug and alcohol services in collaboration with partners across the city to ensure they rehabilitate people, rather than trap them in dependency.
We are working to embed health and wellbeing in all of our actions and decisions, and make our city an environment that generates health and wellbeing by default, through its design, opportunities and the empowerment of its people.
This bold and ambitious approach to public health will at last begin to address many of the deep-seated health inequalities that have shamed our city for generations.
COUNCIL TAX
One of the most difficult decisions this year has been whether to increase Council Tax. It has been frozen for the last four years to help families living with the cost of living crisis. In contrast, the Opposition in this chamber have called for above-inflation council tax rises for the last two years. Their reversal of that position tonight, Lord Mayor, is interesting. Perhaps they can explain their sudden change of heart?
I am not a fan of council tax rises. I have consistently opposed them. But the Government’s promise that the Freeze Grant would be protected has turned out to be false. By merging previous years’ Freeze Grants into the Revenue Formula Grant, which has then been cut year on year, the amount we accepted in Freeze Grant hasn’t been protected and has diminished in value over time. A council tax rise, on the other hand, will remain a permanent increase in the council’s budget.
On this basis, I do not trust the Government to protect the value of the Freeze Grant in future years. They have broken the link, established as a principle when Council Tax was introduced in the early 1990s, between the council tax base of a local authority and the formula grant received from Government. We have no alternative but to increase our council tax income in the light of such savagery, as it is the only way we can begin to future-proof our city under the current system.
We are therefore proposing a rise in council tax of 1.95%, which amounts to an extra 34p per week for a band A property. This year the rise in council tax will help support vital neighbourhood services.
I know that members of this City Council do not take the decision lightly. We know that many people in Newcastle are still failing to see the benefit of economic recovery. And many are victims of welfare cuts.
So we will continue to protect those on low incomes by preserving our Council Tax reduction scheme – despite it also falling victim to cuts in central government support.
THANKS TO STAFF
I would like to conclude, Lord Mayor, by paying tribute to the Council’s staff.
Working for Newcastle City Council isn’t just a job, it’s a way of life; a commitment to a great city in which people are rightly proud.
In common with our communities, austerity has had a devastating impact on our workforce.
Our estimate two years ago that we would have to reduce our staffing by 1,300 from 2013 to 2016 has proven to be accurate. In total, since the coalition government began its austerity programme, the Council’s workforce has shrunk by 2,200 or 30%. That’s about as many jobs as would be lost by the closure of Virgin Money’s HQ, or Fenwick’s Department Store, or the complete shut-down of the offshore marine sector on the North Bank of the Tyne. If that had happened, there would be a national taskforce in place and front page headlines about terrible job losses for the region.
We will continue to support our staff in these tough times and do everything that we can to avoid compulsory redundancies. We are committed to supporting Trade Union facility time, and will continue to work closely with our excellent trade unions. This is a successful partnership which has helped many of our staff to retrain in new roles, to become redeployed in other areas, and if necessary supported to find alternative employment. This is a Council that not only listens to the views of our staff – but takes action in response.
CONCLUSION
What is clear, however, is that the coalition government is deaf to our calls for a fairer approach.
When Tory and Lib Dem MPs cheer in the Commons at the announcement of more austerity it means more services and jobs lost, reduced support for vulnerable people, and less investment in creating the next generation of jobs.
The decisions we have faced this year in setting the budget have been among the hardest we have ever faced.
Five years of Government austerity have taken a terrible toll on this council and the people of this city, and the prospects for the future look uncertain.
But I’m proud of this city’s response, and confident we can weather the storm of austerity together.
We are focused on taking our city forward, not backward. Realistic about the reduced resources available, but passionate about the difference we can still make.
This budget is not just about how we respond to cuts to revenue. It’s a milestone on our journey to create a modern European city that is confident, progressive and inclusive.
In the face of relentless, unfair and vindictive government cuts, our response here is bold, fair and innovative.
This is a great city, and our best days are ahead of us.
This budget is born from that confidence.
We continue to protect the most vulnerable in the city.
We are investing in the city’s future.
We are fighting back.
Lord Mayor, this Budget represents Fair Choices in Tough Times and I commend it to Council.