Leader of Newcastle City Council Nick Forbes' 'scissors of doom' is realised

As Newcastle City Council considers the latest cuts to its budget, local government reporter Kate Proctor looks at how the region's councils have taken the brunt of austerity cuts

Nick Forbes
Nick Forbes

Back in 2012, leader of Newcastle City Council described the authority as hurtling full pelt into the “scissors of doom”.

Not a poorly titled Z-list movie, but in fact a description of the economic calamity awaiting Newcastle’s residents as the dual attack of budget cuts and a rising demand for services came their way.

A master of apocalyptic language, Coun Forbes has invariably over the last two years described the situation facing local government funding as ‘savage’ and ‘unfair’, and equally as frequent is his reference to Central Government putting the city in this position.

He’s repeated this mantra, rarely deviating from his well recounted response that the North East is being penalised while the South East gets richer.

As Newcastle’s fourth austerity budget timetable swings around today - Gateshead imposed wide-ranging cuts to many of its services yesterday, while North Tyneside is considering huge job losses and loss of services - those phrases are likely to be heard again.

But while he is in control of how and what to cut, Coun Forbes can point to figures which show that his rhetoric is based in fact and that Newcastle, plus other authorities across the North East are getting a bad deal.

The Central Government funding forumla that once used to take account of ‘need’ has been changed, meaning Newcastle will get around £25.8m less in its Revenue Support Grant and business rates pot in 2015/16m, down from £178.9m to £153.1m.

When it adds this to the cost pressures of an ageing population, inflation and redundancy pay-outs, the annual figure of loss is substantially higher.

The Revenue Support Grant is only a portion of the three-quarters of a billion pounds the council gets in funding, but when you consider small homes in the city mean the council tax income is only 11% of its total budget - Newcastle is on a losing streak.

It’s not just Newcastle, councils across the North East are getting less than their southern counterparts, with public services union Unison saying some councils in the South East have even seen a rise in their funds in the four years Coun Forbes has overseen £100m budget cuts.

This, Coun Forbes says, mean that the city is now facing a ‘fiscal cliff’.

He said: “As the cuts deepen, there have to be doubts about the ability of the council and other public service providers to offer anything more than the basic services required by law.”

Revenue spending heat maps released by Newcastle City Council in 2013 and backed by union Unison and the Audit Commission, reveal that since 2010, Newcastle has £200 less to spend on each resident.

Cllr Nick Forbes, Leader of Newcastle Council
Cllr Nick Forbes, Leader of Newcastle Council
 

Areas the heat maps identifies as having minimal change to council spending power between the budget years of 2011/12 and 2014/15 include much of the South.

In North Devon, for example, in 2011/2012 they had to save £2m; in the same 12 months Newcastle had to save £48m. North Devon has since had to find £28m of savings for the year 2014/2015 but figures show from the outset the depth of cut-backs Newcastle has faced.

In 2012-13 Newcastle had to cut £30m, in 2013-14 it was £37m and in 2014-15 it was £36m with a further £90m predicted over the next three years.

It is a similar story across the North East with Stockton Council expecting a funding reduction of 58% by 2018, down to £53m from £120m. Durham County Council has had to cut £100m and a further £90m is planned over the next three years with 1950 job losses. Northumberland County Council plans to lose £130m by 2018, and Gateshead Council has cut £75m since 2010 and needs to cut a further £46m by 2016. Sunderland cut £37m in 2013/2014 and £32m in 2014/2015.

The Government has a set of maps of its own and Secretary of State for Communities and Local Government Eric Pickles strongly denies there is a north-south divide over funding, and that whether rural or urban, local government funding is fairly allocated.

Their own heat maps, on the Department for Communities and Local Government’s website, show that local authority spending power per dwelling is between £2,151 and £2,800 in most of the North East, the highest of many regions in the country.

Yet the North East is also an area of incredibly high need, and most people would expect there to be more public spending per head.

Paul Gilroy, Unison branch secretary for Newcastle, said: “The heat map data is factual and indisputable. The reality of the situation is that councils acrosss the North East are all facing substantial losses per head of population to spend on services than the South.

“The reality is where you end up in the dispute between the Government and council. The Government will say that per head they get a similar amount of money but we have people who are more needy. We have more looked-after children, there’s more people who need social care so effectively there’s an argument to say that we need more money than the leafy suburbs.

“It’s not that we don’t get money, it’s the specific grants that we used to get for areas of deprivation and need that have gone into the Revenue Support Grant.

“The South East just doesn’t have the same problems that we do. Every council in the North East will be in the same position, the only difference we have over the last few years is that Newcastle went through a budget process over three years but if you add up the cuts to other local authorities in the region is roughly ends up the same.

“Councils have just chosen to deal with the situation in different ways. Durham has significant reserves from when it became a unitary authority and Northumberland has sold off its county hall to give it extra funds.”

He said that while Coun Forbes asks city councillors to agree to his draft budget proposals as laid out in Fair Choices in Tough Times, before they go back out to consultation in December, his main concern is what will happen to the £10.1m currently sat in council reserves.

Mr Gilroy said: “They would say it’s for a rainy day but we’d say that it’s pouring down on the city at the moment. People are losing their jobs and and will see their services taken away. We understand the situation they are in but we still think there are some choices that they could make.”

Anita Lower, leader of the Lib Dem opposition group on the city council, wants to move on from the argument between Labour and Conservatives over who is to blame.

“We all argue that we would like to see a more equitable formula, however the city is still getting three quarters of a billion from the Government alone in cash terms and that’s not counting the money that comes in to schools,” she said.

“It’s great saying it’s the Government’s fault, but we could say it’s Labour’s fault, but that’s history and we need to look to the future.

“However, when the money comes in from Government, they make no restriction on how we spend that money and it’s down to them to make the choices that have a lasting affect on the city.”

Coun Nick Forbes, leader Newcastle City Council
Coun Nick Forbes, leader Newcastle City Council
 

First on her list if in power would be ripping up a £785,650 feasibility study into transport projects as part of the Re: Newcastle scheme, and also halting further capital works to the Civic Centre. While the money can’t be transferred from building projects to revenue spending, she feels office refurbishments at a time of potential redundancies are insensitive.

In 2012 Coun Forbes’ wrote a blog post on the council’s website called ‘Newcastle in 2016’, in which is imagined the city as one suffering ‘real hardship’, and the progress on child poverty going into reverse.

Half-way through and his language has softened. Today he talks instead of his hope for greater English devolution and how it could create a better deal for local government. His criticism of Central Government funding formulas is by now well known.

He said the situation facing the council today is to ‘consider unpalatable options’ about services which ‘we know people cherish’.

“We will always try to do this fairly - focusing our resources on the people who need them most, and minimising harm to the most vulnerable - but there is no doubt we face some very difficult decisions,” he said.

While child poverty levels and the number of children in care in the North East continues to shock, and demands on council services rises, the ‘scissors of doom’ analogy may be right.

But despite all the arguments, half way through Coun Forbes’ austerity budget plans, Newcastle and other North East councils are continuing to struggle with their deal from Central Government and the city’s undeniable need.

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