Newcastle Labour council: Austerity & the Transformation of Local Government


[Speech delivered at an RCG meeting on 8 March 2016.]

In February 2015, the Office for National Statistics (ONS) published new figures on suicide. These revealed that the North East has the highest suicide rate in England – 13.8 deaths per 100,000 population. The London figure is nearly ½ of this: 7.9 deaths per 100,000 population. In 2013, there were 22 suicides in Newcastle. (ONS, Suicides in the United Kingdom: 2013 Registrations, 19 February 2015.) The ONS report on these statistics directly attributes a rise in suicide to cutbacks in mental health care, rising deprivation & unemployment.

Further statistics from June 2015 reveal there are an average 696 hospital stays for self-harm in the city per year – around 2 a day. This rate is 229.7 incidents per 100,000 population worse than the average for England. (Public Health England, Newcastle upon Tyne: Health Profile 2015, 2 June 2015.) In the absence of adequate mental health care, many working class people are turning to alcohol. 2014 saw a 30% increase in the number of alcohol related deaths for Newcastle, placing the rate 64 deaths per 100,000 population. This is 1.4x higher than the national average. (Craig Thompson, ‘Alcohol killing more Geordies than ever before as figures rocket on Tyneside’, The Chronicle, 8 March 2016.)

These figures are indicators to a terrifying reality. A 2014 study of 90,000 people across 144 countries found that 75% of Europeans with mental illnesses do not receive mental health treatment. Services are inadequate & discrimination is rife. (King’s College London, ‘Stigma ‘key deterrent’ in accessing mental health care’, EurekAlert!, 25 February 2014.) The severity of Newcastle statistics only point to a far more severe situation in reality.

On 2 March – last Wednesday – Newcastle Labour council voted to pass further cuts of £32m to the city’s public spending budget. Contained within this budget was a 100% cut to non-statutory mental health services, alongside cuts to statutory care services: the mental health recovery team will cease to function unless further funding can be found, 21% will be cut from adult social care & 28% will be cut from care in the home services. (Figures relating to the council’s budget are from their own documents, found here.) Every single Labour councillor voted for the budget – they were unanimous.

I highlight mental health services not to make it the focal point of our discussion, but to make it clear how serious the cuts we face are. A few more examples will do the job just as well. 100% of council funding to domestic violence services – £200,000 per annum – will be lost. In 2013, there were 30,000 incidents of domestic violence reported to Northumbria Police – 3 an hour. 40% of these people had children. (Kate Proctor, ‘Tyneside’s ‘forgotten’ victims of domestic violence revealed at Newcastle conference‘, The Chronicle, 15 September 2014.) The “anti-austerity” Labour council has agreed to abandon them. They have done the same to elderly residents – cutting lunches & preventative services. They will charge for childcare wherever possible & have cut all childcare provision in homeless shelters. Council tax has risen 3.9%.

1stly, let us deal with the Labour Party. What we need to say is simple: the Labour Party is, in practice & in reality, a Party of austerity. Moreover, it does not possess an anti-austerity leadership. On 17 December 2015, Jeremy Corbyn (leader of the Labour Party), Jon Trickett (shadow secretary for Communities & Local Government) & John McDonnell (shadow Chancellor) sent a letter to Labour council leaders. It contains instructions on the implementation of cuts budgets in local councils. The majority of its content is a thinly veiled threat: it instructs councillors on the legislation that could be enforced if they were to vote against budget cuts. In concluding, Corbyn & his supporters write that:

‘The government’s austerity cuts are a political choice not an economic necessity. It is critically important therefore in the run up to the local government and mayoral elections in May 2016 that we pin the blame for the cuts in local government services squarely on the government, which is causing them.’ (Emphasis mine.)

In other words, cut & run. As you devastate your communities, pin the blame on the Conservatives. The election comes before the working class.

This is evidenced by the actions of Newcastle Labour council, not just now, but over the last 6 years. At every opportunity to resist, the council has shown that it wills austerity. At every chance, Labour councillors in this city have voted unanimously in favour of cuts.

This brings me to my next point. Austerity is a process; it has a cumulative impact. The total that the council has cut from public spending since 2010 now stands at £222m – around £792 per person living in the city [i]. The services that this amount represents have been devastated. A complete list would be exhausting. Put in the bluntest way possible: the council has cut so far & so deep, all that remains are those services like mental health care or domestic violence support. There is nothing else.

‘We must remain ambitious. We’ll invest in the city.’ These words come from a rather bizarre video produced by the council. (Newcastle City council, ‘Budget 2016 – Ambition in the face of austerity‘, 15 December 2015.) A statement from the council’s chief executive, Pat Ritchie, in the budget documents adds a little bit more flesh to the bone of this rubbish. She writes that ‘Newcastle’s  economy  is  growing  stronger,  and  the  council  is  helping by  investing  in  the infrastructure  and  assets  that  create  the  right  conditions  for businesses  to  grow.’

Business growth means private profit. Businesses will only invest in an area if the conditions are right for them to begin making profit. The council is, explicitly, intent on creating the right conditions for private interests to make profit. What they fail to mention is how profit is created.

Profit exists as a ratio. Money is invested, that is spent, on wages, raw materials, machinery etc. Profit is the return on this investment, minus the amount initially spent. In order to make conditions ripe for profit, the cost of this expenditure must be lowered. As raw materials are sold by other Capitalists, machinery produced by other Capitalists, the only way to reliably reduce expenditure is to reduce wages or increase the productivity of the work bought by wages. This is complex: wages are paid to real people, for real work.

The whole of austerity is geared toward this point: the reduction of wages. Unemployed workers are controlled by savage cuts to benefits spending & the ludicrous bureaucracy which accompanies them. Desperation is created from deprivation, so that people will accept any job at whatever wage, simply to survive. Cuts to services undoubtedly contribute to this. They undeniably create deprivation, desperation. Wages in Newcastle are still falling. The average wage for the city in 2014-15 was £410 per week, compared to an average of £425 per week in 2013-14. (2014-15 statistic from here. 2013-14 statistic derived from Brian Daniel, ‘Newcastle named as the fourth best city for families to live in England and Wales’, The Chronicle, 3 November 2014.)

However, without a more direct way to aid in this process, the Labour council has taken to aiding in lowering the costs of raw materials, rent, offices etc. This is what Ritchie means when she says that ‘the council is helping by investing in the infrastructure and assets that create the right conditions for businesses to grow.’

In 2012, Gateshead & Newcastle council’s signed what is known as the ‘City Deal’. Notably, this marked out 4 development sites as part of a Newcastle-Gateshead Accelerated Development Zone (ADZ) & initiated a £92m Capital investment programme. The ADZ development sites are retained by the 2 councils for 25 years, allowing them to retain the business rates on these investments. The £92m is composed of loans which must be paid back via these business rates. (See the government paper on the deal for early details & predictions.) None of this will go into public services – it is earmarked for investing in private infrastructure. In other words, the council is investing to reduce costs to businesses.

At the same meeting that the council agreed its latest cuts, they agreed to a devolution deal which will continue the process signified by the 2012 ‘City Deal’. Devolution means that the council will become part of a combined authority, alongside 6 other North East councils. (Dan O’Donoghue, ‘Newcastle city leaders give seal of approval to prospective £1.5bn devolution deal’, The Chronicle, 3 March 2016.) If the rest of these councils agree, £1.5bn will be pumped into Capital investment & business rates will be retained. Investment will begin at £30m per annum. (Newcastle City council, ‘Devolution Agreement’, Newcastle City council website, 23 October 2015.) Let us be clear: this is not investment in services. It is debt fuelled investment to generate “growth” – that is, profit. The council wishes to commit itself permanently to this process.

What we are witnessing in Newcastle is not what the Labour Party claim. The devastation of our services is not simply “Tory austerity”. It is the dismantling of state welfare & the transformation of local government into the protectorate of private investment, all orchestrated & led by a Labour council. The ambition of the council is equally clear: they wish to turn themselves into private investors, into elected Capitalists. They will do so by “saving” Capital from social expense, setting it free into the anarchy of privatisation. The use of business rates in private investment is the use of public money as private Capital. Forbes is proud of this: ‘I am proud to lead a council which is prepared to invest today for a better tomorrow.’ (Nick Forbes, ‘Newcastle City Council is using public money to make the city attractive to investors’, The Journal, 25 February 2015.)

A little over 2 weeks ago, my comrade & I wrote an article on these cuts for our organisation’s website. I will conclude in the same way today.

‘There is one path left: resistance. The council has shown, over the course of 6 years, that it will not do anything close. It stands against the working-class of Newcastle today, as it always has done, bleeding the city dry. We must organise now. Class war has been declared on us, and it is to class war which we must respond.’ (James Bell & Anna Snaith, ‘Newcastle council cuts: Corbyn’s Labour in motion‘, Revolutionary Communist Group website, 25 February 2016.)

[i] This figure differs from that given by Labour council leader, Nick Forbes, in his budget speech. The figure here is correct – derived from cross-referencing statistics between council documents & census information. As Forbes merely states that “the total cut” is lower, it is safe to assume he takes a different starting point.


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