Looking Over the Fiscal Cliff

This week, we are featuring three specially commissioned blogs from leading figures in local government that discuss the financial challenges facing councils in England and Wales.
Today, Cllr Nick Forbes (Leader of Newcastle City Council) shares his views on how the cuts have impacted on services in the North-East of England and beyond, and what the outlook is for the next few years.

Over the last five years, councils have had to deal with unprecedented cuts to funding as a result of the Government’s austerity programme. In Newcastle, for example, we have lost £191m, and face the loss of at least another £100m in the next three years.

Here, as in many other major cities, we have had to close our day care centres and had to find new ways of running libraries or risk closing them down, and been forced to transfer our leisure centres to charitable bodies.

Now we are being forced to consider dismantling our social care system as we struggle to deal with another five years of austerity.

All politicians can see the economic sense in cutting the country’s deficit – but it’s the scale and pace at which those cuts must be implemented that has caused so much offence, damage and hardship – hardship that is set to get worse as we go on a terrifying rollercoaster ride that nobody really wants to be on.

fiscal cliffI wrote to the Prime Minister asking for the opportunity to explain the impossible decisions we are facing in Newcastle. More than 2,000 council employees have lost their jobs as a result of the cuts, and many more will be under threat as a result of the Spending Review. The people of Newcastle continue to suffer this assault on public services, coupled with the welfare reforms which can leave families penniless and at the mercy of the food bank.

But what really adds insult to injury is the unfairness of the cuts. We are not all in this together. Put simply, the big urban areas of the country – Newcastle, Sheffield, Leeds, Birmingham and Liverpool to name a few – have suffered the biggest cuts while many shires in the south have suffered very small cuts and even increases in some.

The cumulative impact of change in spending power since 2010 shows the North East, with the highest unemployment rate in the country, suffered the highest level of cut at over £215 per head – equal to a 19.5 per cent reduction in spending power – that’s 5.8 per cent more painful than the England average and 13.4 per cent higher than the South East. The burden of paying down the deficit is falling on the backs of the poorest – a fact endorsed by respected independent bodies such as the Joseph Rowntree Foundation, the Chartered Institute of Public Finance and Accountancy, and now the Public Policy Institute for Wales.

As we sit down to decide where the next round of cuts will have to be made, we are now looking at crossing previously set red lines such as social care and help for the vulnerable.

Further worrying spending decisions will have to be made in the level of public transport subsidy, with the knock on cuts in bus services likely to have a hugely detrimental impact on some areas.

Councils are about to fall over the fiscal cliffs that I have warned about for so long, and if the Government does not reinstate the link between need and funding in local government it is just a matter of time before town halls fail to meet their statutory duties.

About the author: Cllr Nick Forbes is the leader of Newcastle City Council, a position he has held since 2011. A Cambridge-graduate, he has been a Newcastle city councillor since 2000 representing Westgate Ward and became leader of the Labour group in 2007.

Image source: Fiscal Cliff – Forbes