Lord Mayor, this is the fifth budget I have introduced to this council. I make no apology for the consistency of the themes I will outline tonight. From me and my party, consistency in our belief in public services, our belief that opportunity should be for all, regardless of your background, and our fundamental belief that good quality employment is the best route to social justice. 

And this against a backdrop of continued austerity from the Government, an explicit ideological drive to shrink the state to levels not seen since the 1930s, an assault on our values of progress, fairness and inclusion.

Yet again we meet to agree a budget overshadowed by disproportionate cuts to local government funding, and a deeply unfair distribution mechanism which sees our city further disadvantaged. But our response tonight, as it has been for the last 5 years, is not to stand by and let austerity hurt the vulnerable and damage our city’s confidence.

 In defiance of austerity, in the face of George Osborne’s neglect, we have introduced a Living Wage, used our investments to safeguard and create jobs, set up a bursary scheme to help children from disadvantaged backgrounds stay in education.  

 We have found creative ways of keeping libraries open, we have refused to accept that a funding cut means leisure centres close forever. We have built homes, prevented thousands of people becoming homeless, refurbished schools, tackled the suffering caused by legal highs on our streets. We have invested in our roads and pavements, increased recycling rates and won awards for the work done to support those on the lowest incomes.

 But the unavoidable fact is that everything we have done for the city has to be set against the actions of a government ideologically opposed to public services.

 As the Institute for Fiscal Studies has made clear, cuts delivered by the Tory Lib Dem coalition over the last five years have hit poorer areas harder. We saw no Lib Dem benefits to the city during those years, just as we continue to see no apology or acknowledgment of the lasting legacy of their cuts.

 We know conclusively that areas with greater needs or a low council tax base were consistently hit harder throughout the last parliament, and that residents here have suffered more as a result. Over the last five years our city lost £268 per head of population; more than double the English average of £131. This means that, over the last 5 years, our council has had to make £191m of cuts.

 Our evidence also shows there will be no let-up in the Government’s determination to punish the north. We are only half way through what will come to be seen as a decade of pain. This year’s cuts of £32m are to be matched in at least the next two years, and no matter how imaginative and creative we are about managing with less money, we are being forced to undertake a radical re-think about what public services are and how they should support people in need.

 Our latest heat maps show very clearly that the funding distribution continues to penalise the north, and that as far as the government is concerned

 we are on our own.

 The government could quite recently have corrected some of that injustice. Last month the Department for Communities and Local Government announced that, thanks to the generosity of the Chancellor, it had found £300m to help ease transition arrangements following the latest round of council funding cuts.

 Not a penny of this funding made it to Newcastle. Some 83% was dished out to Tory councils who have so far been protected from the worst of austerity.

 Let me be clear about what has happened here.

 We have witnessed the most blatant and disgraceful example of pork barrel politics seen in the UK in recent times. The Government has shed any pretence of a ‘One Nation’ approach and has simply caved in to the howls of protest from Tory councils who find themselves facing the difficult decisions we have already had to take over the last 5 years.

 When we get to this point in the budget there are often those who urge us to do more to stand up to government, to refuse to pass on the cuts. This would be a disaster for this city. As painful a process as it is, as elected representatives of our communities we have a responsibility to make the best of the situation. To do otherwise would be to hand control of the council to Whitehall with all of the shielding of the vulnerable dismantled and all our investment creating a better future undone.

Our role is do all we can to oppose the Government’s approach while continuing to grow the city and provide services to the public that we can be proud of.

That leaves us with today’s budget, Ambition in the face of Austerity.

Some people will ask us why we have put ambition central to a document about multi-million pound spending cuts set to devastate the care sector. The simple answer is we have no choice but to be ambitious for something more, because the alternative is to accept the inevitable consequences of the Government’s addiction to austerity. The effect would be to allow large parts of the north to become the other England, the one which has suffered most, first under Lib Dem and Tory cuts and now under the combined impact of that legacy and a Chancellor ideologically at odds with everything this city stands for.

Blindly accepting austerity without being ambitious for an alternative would condemn Newcastle to demise and decline. We will not accept that. We are ambitious, and now more than ever that ambition will have to be translated into employment. Job creation as a route to social justice has always being a vital part of our city’s identity, but now it has an extra dimension.

The Government has confirmed what we all suspected and set out its intention to completely remove the revenue support grant which once paid for care and services.

Statutory, legally binding requirements on this council will no longer be funded by government grant. Instead, local residents and businesses will take on responsibility for these services through their taxes and rates. The more we can do to grow our economy in Newcastle and the north the more we can invest, through locally raised funds, in our care services. There is no alternative.

Of course, we are committing ourselves to grow as a city even as we as a council lose staff. Since the coalition government first began its indiscriminate cuts this council has seen more than 2,200 posts go. Sadly, the budget for the next year will continue that, though we remain as committed as we were at the start of this process to avoiding wherever possible compulsory redundancies.

We have lost jobs, and will continue to do so, simply because the Tories do not consider local government jobs to be real jobs. If a major employer in the private sector was losing the number of jobs that we have already seen go, there would be a taskforce in place with multi-million pound offers of retraining packages. Instead, the burden falls on ourselves as a caring employer, working in partnership with our Trade Union colleagues.

These job losses bring home urgently the need to invest to keep our city going. Here we have a track record of success. You only have to look to Science Central, for example to see how we as a council back job creation.

Or  look to the North Bank of the Tyne, where we are using a combination of grant funding and Enterprise Zone income to invest in the infrastructure to help make existing businesses more efficient and competitive, and to encourage inward investment. 

Or see the investment in Greys Quarter at Eldon Square, bringing vacant retail units back into use as 20 new restaurants, creating work directly and indirectly as more people come to our city centre.

We invest also in the civic centre, to refurbish it and make it a home for others in the public sector. Again, we do this because we have no choice. The Government is penalising the north, it has made clear there will be no end to austerity, and councils must find new income streams. If we borrow to refurbish this somewhat dated building, we can bring in enough money to pay off the borrowing and generate a profit which we will use to lessen the impact of future cuts.

There are some in this chamber who would halt that process. To do so would be incredibly short-sighted. We cannot turn our back on investment now, at a time when council-generated income is vitally important to the future of public services.

We invest because Newcastle cannot afford to be a city dependent upon an uncaring Government.

And we invest to ensure the workforce of the future has the skills it will need. We commit ourselves this year to maintaining the Newcastle Bursary, introduced to replace the Education Maintenance Allowance scrapped by the coalition.

Through the Newcastle Bursary we will continue to provide financial help, with our secondary schools and academies, to young people who face financial barriers to participating in education or training.

We did that despite the £191m in city spending reductions seen in Newcastle over the last five years.

I have consistently warned throughout that time of the fiscal cliff facing councils as a result of government austerity. Now, at a time of increased demand, local government is half way down that cliff.

As we prepare for the next half of the decade of austerity, and the Chancellor once again says he has got his sums wrong and that ever deeper cuts may be on the way, it is vital we are upfront about the impact of his decisions in our city.

Let us be blunt. There is a national social care crisis unfolding in homes across our city, one in which the vulnerable or the elderly or those who have fallen through the cracks risk being left without sufficient care because the government is no longer interested in its care obligations.

It is difficult to convince people of the enormity of what is happening to care services. Many of those who depend on councils for help will find we do not have the funds available to do all that is asked of us, but those who suffer as a result will probably not unite in visible protests.  Instead, they will be expected to suffer silently as the government washes its hands of its historic care responsibilities.

The impact will be felt across our city.

Last year we provided ongoing support for just over 5,600 adults and 2,500 carers who provide informal care and support for a family.

We provided 1,255 people with equipment and home adaptations so they could safely stay in their own homes for longer.

Of those we helped, 31% were working age, and 69% were people aged 65 and over. 309 people receive more than two visits daily and 206 people receive more than three visits daily.


If you want to know what all that means in practise, look at Wendy’s situation.

Wendy is in her 80’s and has had disabilities since early childhood.  Although she used to be largely independent, as she became older her health deteriorated and she became a wheelchair user. 

Following one of many hospital admissions the ward had believed that she required residential care but her social worker argued for a different approach.  Wendy moved from her flat to one of the Council’s new extra care settings

She receives interventions six times each day at around 30 minutes each time.  Sometimes she requires the assistance of one worker, but in the morning she requires two workers for more strenuous personal care tasks.

Wendy receives support with washing and showering, dressing, application of toiletries and any topical creams.

She is unable to clean her flat, so receives assistance with this, and requires help to alter her position, including throughout the night.

The total weekly cost of support for Wendy is £283.60. Nearly £15,000 a year. You don’t to be a council treasurer to know that caring for many thousands of people like Wendy adds up to the biggest bill the city has.

We as a city pay those bills because we care. And now we’re in a position in which the Government’s action means our good intentions are far higher than out ability to respond.

The care cuts this government is passing to Newcastle will mean difficult decisions. Support to carers will be reduced, the number of social workers will be cut. These cuts are happening to the most important of services and are the result of a Government which is refusing to listen to evidence of a care funding crisis.

In care alone we would need some £15m extra to meet all our care needs, a substantial part of which is made up of the money we need to look after our elderly.

Instead, the Government has said it will allow local authorities to raise council tax by an additional 2% if that extra raised is used only for adult social care. This is a drop in the ocean, a sticking plaster on a gaping wound. It brings in about £1.7m a year, set against an overall package of budget reductions which will see spending cut this year and next year and the next year, with no end in sight. And it shifts the responsibility of funding social care from national government to local residents, breaking decades of convention about the responsibilities of the state.

We have little choice but to introduce this Osborne Tax. Indeed, when setting out our budget and expected funds over the course of this parliament, the government has made clear it expects every council to raise taxes by as much as possible, effectively setting council tax in Whitehall.

There simply is not enough money to shield the vulnerable from the attack. As the IFS pointed out, were councils to use all available funds to maintain adult social care funding at current rates, other departments would face cuts of around 12%, a proposal which would spell yet more misery for children’s services, bin collections and libraries.

The harsh truth is that every additional 1% increase in adult social care spending would require additional cuts to other areas of spending of around 0.5%.

So the budget I present today is in many ways the social care budget.

It introduces the Osborne tax, which residents will to have to pay year on year;

It reveals the Government’s disregard for the elderly and vulnerable;

and it makes clear to the city that our care needs will increasingly have to be met from within our own limited funds.

As well as the Osborne Tax, the council itself will have to raise council tax by 1.95%, providing income to offset but not prevent the full impact of government cuts.

That means for example we will have to look at the budgets used to keep our streets clean. We will put more focus on key routes and shopping centres, with hit squads to tackle hotspots.

We will bring customer service centres together while continuing to speed up our digital transformation.

We will be investing £1.1m of Council funding to help remove 228 households in Walker, Fawdon, West Gosforth, Kingston Park and Jesmond from the threat of significant flooding.

While we continue to scale back as a direct provider of leisure activities, we will be providing transition funding for those centres in Newburn and North Kenton where we are reducing grants.

In the last year we have also been negotiating the transfer of the iconic City Hall and City Pool to a charitable trust Fusion Leisure. Again, this deal will be concluded in the near future. We said at the time that we had not given up on those facilities, just as we remain hopeful that in the long term there is a solution for leisure services in Elswick.

For libraries we are able to avoid closing down branches, but only by reducing opening times. After listening to what people told us in our consultation we will adjust plans to make sure the City library remains open on Sundays.

We know how important advice and help is to those affected by other Government cuts, which is why our Active Inclusion Newcastle partnership is vitally important.

It helps to make the most of the council’s and partners’ resources, by improving information and support that helps to maintain the foundations for stability.  Demand for these services continues to grow as welfare reform impacts on local residents, and places new burdens on the council and its partners to respond to extreme hardship and poverty.

The Government’s Welfare Reforms will see Newcastle residents lose £148 million in annual cuts by 2020.  The greatest impact will inevitably be on those out of work, followed by those in low paid work. Six out of 10 of the affected households are in work.

Our council cannot hope to replace the support being cruelly removed by government, but we can help to shield people against the worst impacts of financial exclusion and welfare reform.

I am delighted that constructive talks are taking place about how we can support CAB through a period of change. And since the budget papers were published, the NHS has come forward with an offer of help that means we can retain, for the moment, the important Byker Lodge facility which supports those with dementia.

Where possible we will focus on preventative health measures, such as investing in activity to prevent falls or encouraging the use of purpose built homes for the elderly and disabled so they can live independently longer.

And we are targeting stop smoking services and health checks in the areas with the most health problems because as this government steps back from care, it is now more important than ever that we help people to stay healthy.

We have all in this chamber looked at ways around these cuts, but the unavoidable fact is we have at least £32m less available to us in the year ahead.

Over the course of this parliament we will be forced to go through a radical rethink of what exactly a council can do for the people it serves.

The only way we as a council will be able to adapt to this future is if we change by consent. We have to be honest with people in the city. We cannot pretend there are any easy answers. We have to look at every opportunity and make the difficult decisions which might come to be seen as vital years from now.

We are at the frontier of what local government is doing, and can achieve, in the most difficult of circumstances. Five years ago people looked with disbelief, anger and indignation about the scale of cuts that we highlighted. Now people look to us as an authority leading the way in unchartered territory; we are leading the reinvention of local government in the 21st Century. It is not easy, it is not comfortable, but it is vital if we are to achieve our vision of a fair and just society. This budget is another step along this journey and I commend it to Council.


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