Council tax could rise after a four year freeze for ratepayers as Newcastle City Council announces a further £90m cut to its budget over the next three years.
Leader of the council Nick Forbes said he couldn’t ‘rule out’ an increase as he looks to save £40m from the next financial year alone as less money comes to Newcastle from Central Government.
Councillor Forbes said the financial year 2015 to 2016 would see the authority facing a series of ‘fiscal cliffs’ as the council struggles to maintain anything but basic services.
The end of certain Sure Start child care services will be announced on Thursday, while the public have been told to expect a dirtier city as the council cuts back on street cleaning.
The Labour leader said: “The Government hasn’t as yet made it clear whether there will be an offer about a council tax freeze but given the dire cuts that we are facing and the need to maintain a decent environment means we can’t rule it out.
“We have frozen the tax for the last four years because we wanted to help people with the cost of living crisis.”
The council’s latest budget cut announcement will go before Cabinet to be discussed by councillors on October 22. Specific services under threat from being axed will be finalised for formal consultation with the public in December, however £5m is already known to be going from the budget for Sure Start centres.
The £90m cut by 2018 is on top of the £151m that has been cut since 2010 which led to some libraries being transferred into community ownership and the City Pool shut down.
Coun. Forbes, said:
“I have warned in the past that government cuts mean that public services in our city are facing a fiscal cliff. Today we are at the very edge of the precipice.
“We have begun a debate with our partners about how we can start to make this happen in many areas – but particularly in health and social care where we need to move resources away from crisis response to those services which help prevent people from coming to harm in the first place.”
He said greater devolution to the North East of England would help combat some of the ‘unpalatable options’ the council is facing, however until that happens there will be cuts to services he knows people cherish.
Further conversations with Sir Len Fenwick, the Chief Executive of Newcastle upon Tyne Hospitals NHS Foundation Trust, and other key health agencies will now need to be had as the council aims to devise stronger partnerships on delivering adult social care than ever before.
The Labour representative said: “There’s a willingness from health partners to do things differently.”
The £40m cut in the first year is to cope with the expected expenditure required of the council and a £25m decrease in Central Government’s revenue support grant.
However he said not all councils across the UK have been hit with the same funding reduction and the cut to Newcastle’s budget had been ten times greater than other councils. He said the city being given an ‘unfair’ financial deal is backed by the Joseph Rowntree Foundation and Audit Commission.
Liberal Democrat councillor Anita Lower, leader of the opposition, said:
“You can blame Central Government but no one is saying ‘you must not fund Sure Start’. Central Government is saying here is the money, now you decide what to do with it.
“It’s about being creative and being aware of what’s out there and what needs do the public have and doing your best to provide that. We are at the point now where we know what’s coming from Central Government. Yes it’s tough but that’s what being in charge is about but these are Nick Forbes’ decisions.
“In the last two years we should have been talking more with parents, community groups and the private sector. There’s scope to get money from health, and schools could be doing more. Schools could use the Government’s pupil premium money to work with families or put it into Sure Start type services.”
> “It’s about being creative and being aware of what’s out there and what needs do the public have and doing your best to provide that” = workfare, no doubt. Why pay when you can conscript someone to do it for nothing.
Residents from across the city are invited to have their say on the council’s preparatory budget planning at www.letstalknewcastle.co.uk
Detailed proposals will be published for formal consultation in December 2014. The council will make final decisions on its budget in March 2015.
Source – Newcastle Evening Chronicle, 15 Oct 2014
David Cameron’s pledge to cut the benefit cap from £26,000 to £23,000 if the Conservatives win the next election could force housing associations to turn away families in need of social housing.
Mick Sweeney, chief executive of One Housing Group, which operates in London and the southeast, said associations may be forced to abandon plans to build much-needed new homes as result of the change. They may also have to turn away certain tenants, he added.
“We’re going to look at their income and we’re going to have to say, if they’re wholly benefit-dependent and they can’t afford even the sub-market or social rents that we’re charging, [then] we can’t house you,” he said.
“What happens to those families? There are lots of unintended consequences to this.”
Elizabeth Austerberry, chief executive of Moat, which also houses tenants across the southeast of England, said that rent was the biggest source of steady income for associations. Rental streams are already placed under threat by the introduction of universal credit.
“If the benefit cap goes down to £23,000, it will make certain types of home extremely vulnerable,” she said.
Between 40-50% of Moat’s residents are benefit dependent, Austerberry explained, adding that for some housing associations this figure is as high as 80%.
“For an association like that it [the reduction of the cap] will make it extremely difficult for them to generate new housing, particularly if they haven’t got a strong housing market. I suspect it will make it extremely difficult for us to build three-bedroom homes, and maybe two-bedroom homes in most of our areas.
“If we’re not going to be able to collect rent from people, then where is the money going to come from? That again will push us further towards the open market.”
Housing associations have increasingly pursued commercial projects to generate income since the government cut grant funding for new social homes by 60% in 2010. But securing finance for such operations is challenging if investors notice a risk to an association’s main income stream, Sweeney said.
“If the banks get nervous then they won’t lend us money. And if they won’t lend us money then we can’t build new homes.”
Richard Blakeway, director of housing for the mayor of London, said that housing associations have no choice but to raise money through commercial projects.
“There needs to be an acceptance that the landscape has changed. Some housing associations have responded brilliantly, others are still quite cautious. They need to stop thinking that there is going to be a significant change in terms of capital subsidy in relation to affordable housing, because I can’t see that happening.”
Uncertainty could not be cited as a reason for avoiding commercial initiatives, he added.
“The funding settlement that exists now will last until the end of the decade, and then the rent settlement goes into the middle of the next decade.”
Conference delegate David Hancock, representing Hyde Housing Group, questioned how associations could succeed in a commercial market under current regulation rules.
“We have to carry out commercial activity to meet our social objectives, but we’re regulated by a regulator which is principally driven by protecting public assets. At some point that has to give,” he said.
Sweeney agreed, stating that although the coalition’s decision to abolish the Audit Commission and the Tenant Services Authority was welcome, change to the regulation of the housing sector was still needed. The Homes and Communities Agency “needs to be put back in its box,” he said.
“It’s growing, it’s trying to extend its remit, its trying to second guess what our business plans are. I hope a conservative government would put regulation on a proper footing, and that is not interfering with building homes.”
Source – Welfare News Service, 01 Oct 2014