Tagged: Forbes

Newcastle is being held back economically by too tight Government control on finances

Newcastle is being held back by the Government’s tight hold on local authority purse strings, it has been claimed.

The argument was made by Newcastle City Council leader Nick Forbes at its annual ‘State of the City’ event.

He called on the Coalition to adopt a much more radical approach to local authority finances to enable the city to become more economically viable and compete “on a level playing field”.

Coun Forbes said: “In England 95% of all taxes raised in the city go back to the Government, and most of the funding that comes back to us does so with strings attached.

“This is stifling local innovation and hampering the ability of local decision makers to purse local priorities.”

He was joined at the event by a panel of experts in a public debate on the matter including representatives of the Thinking Cities campaign, an independent body calling for more power to be devolved to local authorities.

They say unemployment, poverty, housing and economic growth can all be helped positively in this way.

Coun Forbes acknowledged there had been some movement in this direction by the Government through its Local Growth Fund and City Deals initiatives.

But he added: “While these are welcome developments, we should remember that local growth pot of around £2bn is a drop in the ocean compared to Lord Heseltine’s original recommendation of £70bn be devolved from Whitehall to local areas to get the economy moving.”

The City Deal allows Newcastle to borrow to fund development and use the additional business rates by the investment to pay the loan back.

This releases £92m to invest in our city’s future, generating a massive £1bn return and 13,000 jobs over the nest 25 years,” he said.

Coun Forbes cited the work on the Stephenson Quarter, Science City and the Central Station, as examples of the city deal’s benefit. It has also led to transport improvements around Newcastle including improvements to key junctions on the A1.

However, compared to other cities around the globe, Government policy is still “centralist”, Coun Forbes said, with German cities controlling six times more of the taxes raised than the UK, while in the US and Canada it is seven times and 10 times the amount respectively.

Coun Forbes: “Greater freedom to decide how to spend the money generated in cities, such as property taxes, would help the Core Cities meet their target of outperforming the national economy and becoming financially self sustaining.”

Source – Newcastle Evening Chronicle, 30 July 2014

Newcastle City Council reveals £40m in further budget cuts for next year

Newcastle City Council it to slash its budget by £40m as a new set of cuts is drawn up to meet the Government’s deficit reduction plan.

The multi-million pound cuts will result in another round of staff redundancies, services being further cut and some mothballed.

The council is already in the middle of implementing a £38m cuts package for this year.

But council leader Nick Forbes and chief executive Pat Ritchie took the rare step of outlining the financial plans for 2015/16, which will have to be formally ratified in March next year.

Coun Forbes said: “Normally we wouldn’t get into budget conversation until much later but we’re doing a lot of early thinking because of the scale of the challenge we are facing.

“We want to have an honest conversation with people in the city about the impact of austerity cuts and what they mean for the services they enjoy and have come to rely on.”

Coun Forbes and Ms Ritchie would not specifically identify how many jobs would go and which services were under direct threat, with firm plans not likely to be announced until the autumn, after consultation with staff and council partners on how best to proceed.

But in a grim warning of what was to come, Coun Forbes said that so far the council has only achieved 40% of the budget savings required by the Government.

“The level of cuts are so severe that there are no areas we’re not looking at and trying to find alternative ways of funding,” he said. “The pace and scale is so great the council will have to do less in the future.”

He added: “The challenge is the council has statutory obligations and can’t simply stop, for example, looking after children at risk of sex or violent abuse or caring for old people in their own homes. We have a legal obligation to fund concessionary travel so our strategy is partly to work with other partners to reduce cost pressures.”

While not giving specifics, Coun Forbes hinted at some areas that were in the spotlight, saying: “If we don’t have an indication of a change of heart by later this year, many services aimed at supporting children and families as well as the help that keeps older people out of hospital are likely to be at risk.”

Street cleaning and environmental services are another area under the microscope, and the council leader said: “Unless we can change the behaviour of the minority of people who drop litter, fly tip and allow dogs to foul pavements, the council won’t have the resources to clean this up in the future. There is no doubt our city will get dirtier as a result.”

Coun Forbes added: “We will be straining every sinew to protect job numbers but there will inevitably be some redundancies. We will endeavour for them to be voluntary but we have no figures in mind yet. We will mothball some services with the intention of growing them again in future years. Austerity will pass. There is a growing clamour from local government to the present government for change.

“We hold onto the hope a future Government would take a different approach. But the next two or three years are going to be extremely tough for every council.”

Coun Forbes said there won’t be the repeat of two years ago when the council talked of a 100% cuts in arts funding then made a U-turn to 50% and set up a culture investment fund.

Coun Forbes said: “It was controversial at the time, in the long term it will be seen as the step which protected arts from continued cuts.”

But he said that if the scale of cuts continues, there are projections that by 2018 the council will not be able to fulfil its legal obligations in funding services and that it would become “unviable”.

Source –  Newcastle Evening Chronicle,  17 June 2014

Britain’s Five Richest Families Worth More Than Poorest 20%

This article  was written by Larry Elliott, economics editor, for The Guardian on Monday 17th March

The scale of Britain’s growing inequality is revealed today by a report from a leading charity showing that the country’s five richest families now own more wealth than the poorest 20% of the population.

Oxfam urged the chancellor George Osborne to use Wednesday’s budget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.

The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top.

Although Labour is seeking to make living standards central to the political debate in the run-up to next year’s general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010. But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-value London property in order to pay for modest tax cuts for working families.

The early stages of the UK’s most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership.

In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.

The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital’s soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn).

Oxfam’s director of campaigns and policy, Ben Phillips, said: “Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet.

“It’s deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline.”

The UK study follows an Oxfam report earlier this year which found that the wealth of 85 global billionaires is equivalent to that of half the world’s population – or 3.5 billion people. The pope and Barack Obama have made tackling inequality a top priority for 2014, while the International Monetary Fund has warned that the growing divide between the haves and have-nots is leading to slower global growth.

Oxfam said the wealth gap in the UK was becoming more entrenched as a result of the ability of the better off to capture the lion’s share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% have seen a real terms increase of only £2.82 a week or £147 a year.

The charity said the trends in income had been made even more adverse by increases in the cost of living over the past decade. “Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase.”

Osborne will this week announce details of the government’s new cap on the welfare budget and has indicated that he wants up to £12bn a year cut from the benefits bill in order to limit the impact of future rounds of austerity on Whitehall departments.

Oxfam said that for the first time more working households were in poverty than non-working ones, and predicted that the number of children living below the poverty line could increase by 800,000 by 2020. It said cuts to social security and public services were meshing with falling real incomes and a rising cost of living to create a “deeply damaging situation” in which millions were struggling to get by.

The charity said that starting with this week’s budget, the government should balance its books by raising revenues from those that could afford it – “by clamping down on companies and individuals who avoid paying their fair share of tax and starting to explore greater taxation of extreme wealth”.

The IMF recently released research showing that the ever-greater concentration of wealth and income hindered growth and said redistribution would not just reduce inequality but would be economically beneficial.

“On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme”, the IMF said in a research paper. “And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political or broader social considerations.”

Phillips said: “Increasing inequality is a sign of economic failure rather than success. It’s far from inevitable – a result of political choices that can be reversed. It’s time for our leaders to stand up and be counted on this issue.”

Landed gentry to self-made millionaires

Duke of Westminster (Wealth: £7.9bn)

Gerald Grosvenor and his family owe the bulk of their wealth to owning 77 hectares (190 acres) of Mayfair and Belgravia, adjacent to Buckingham Palace and prime London real estate.

As the value of land rockets in the capital so too does the personal wealth of Grosvenor, formally the sixth Duke of Westminster and one of seven god parents to the new royal baby, Prince George.

The family also own 39,000 hectares in Scotland and 13,000 hectares in Spain, while their privately owned Grosvenor Estate property group has $20bn (£12bn) worth of assets under managemenSpaint including the Liverpool One shopping mall, according to leading US business magazine Forbes.

Reuben brothers (£6.9bn)

Simon and David Reuben made their early money out of metals. Born in India but brought up in London, they started in local scrap metal but branched out into trading tin and aluminium.

Their biggest break was to move into Russia just after the break-up of the Soviet Union, buying up half the country’s aluminium production facilities and befriending Oleg Deripaska, the oligarch associate of Nat Rothschild and Peter Mandelson.

The Reuben brothers are still involved in mining and metals but control a widely diversified business empire that includes property, 850 British pubs, and luxury yacht-maker Kristal Waters. They are also donors to the Conservative party.

Hinduja brothers (£6bn)

Srichand and Gopichand Hinduja co-chair the Hinduja Group, a multinational conglomerate with a presence in 37 countries and businesses ranging from trucks and lubricants to banking and healthcare.

They began their careers working in their father’s textile and trading businesses in Mumbai and Tehran, Iran but soon branched out by buying truck maker, Ashok Leyland from British Leyland and Gulf Oil from Chevron in the 1980s, while establishing banks in Switzerland and India in the 1990s.

The family’s London home is a mansion on Carlton House Terrace, overlooking St James Park and just along fromclose to Buckingham Palace, which is potentially worth £300m. They have links with the Labour party.

Cadogan family (£4bn)

The wealth of the Cadogans family is built on 90 acres36 hectares of property and land in Chelsea and Knightsbridge, west London.

Eton-educated Charles is the eighth Earl of Cadogan and ran the family business, Cadogan Estates, until 2012 when he handed it over to his son Edward, Viscount Chelsea.

Charles, who is a first cousin to the Aga Khan, started in the Coldstream Guards before going into the City.

He was briefly chairman of Chelsea Football Club in the early 1980s and his family motto is: “He who envies is the lesser man.”

Mike Ashley (£3.3bn)

Ashley owns Newcastle United football club and became a billionaire through his Sports Direct discount clothing chain which he started after leaving school.

He was the sole owner of the fast growing business, which snapped up brands such as Dunlop, Slazenger, Karrimor and Lonsdale, until it floated on the stock market in 2007. He now owns 62%.

Ashley is a regular visitor to London’s swankiest casinos but is famously publicity-averse

Source – Welfare News Service,  17 March 2014

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