£200m to be wiped off North economy

Nov 20 2009 by Adrian Pearson, The Journal

MORE than £200m is to be wiped off the North East economy as Gateshead Council becomes the latest to announce massive cuts.

Council leader Mick Henry has revealed he faces a £60m shortfall over the next three years as a result of an expected fall in Government grants.

Mr Henry has had officers draw up a worst-case scenario showing where the cuts could potentially fall, including a drastic reduction in elderly care and the end to popular summer events such as the Gateshead Flower Show.

It is expected the cuts will lead to hundreds of job losses, and opens the way to a steep hike in council tax next year.

Gateshead is the latest council to announce massive cuts, following on from Durham County Council’s £60m black hole and desperate attempts in Northumberland to save £30m a year over the next three years.

The North East funding crisis is expected to get worse as councils such as Sunderland, North Tyneside and Newcastle look again at their budgets. Part of the problems lies in an expected cut in Government grants.

Many councils are predicting an end to the current three-year spending settlements next year, with expectations that the next Government will produce an emergency one-year budget which will include council cuts of up to 12%.

In Gateshead these moves would see almost every council department forced to cut back. Street cleaning and grass cutting would be reduced and cash for maintenance of the Millennium Bridge reduced to the bare minimum.

Libraries could be closed or merged and replaced with mobile services.

And smaller adult day services could be closed down while the council could consider leaving elderly care home services to private businesses.

Last night Labour councillors were accused of trying to gloss over a “Labour Government mess”.

Neil Bradbury, the Liberal Democrat’s parliamentary candidate for Blaydon and a councillor in Northumberland, said taxpayers would soon notice the impact of the cuts.

He said: “Every local authority in the country is about to be hit with these staggering cuts. We are doing what we can to cope but councillors in Gateshead shouldn’t overlook the fact it is their Labour colleagues in Government directly causing this problem.

“And I think job losses at Gateshead are now inevitable.” Council leader Mick Henry, a reluctant critic of the Government, has admitted there are tough decisions to be made.

He said: “This is a draft spending plan, with a list of possible options that we want people to consider now to prepare for what might be more challenging financial times ahead.

“The economic downturn means there is less money coming in to the council but at the same time more people need the services that the council provides.

“Looking at all the options together we hope to make robust plans to enable us to protect front-line services while ensuring we continue to work towards our vision for the future, to make Gateshead a better place to live work and visit.”

The recession has caused a big drop in the amount of cash coming into council coffers as big businesses put on hold multi-million pound development plans. Added to that is the impact of a cut in interest rates which have slashed the expected return on millions of pounds worth of council savings.

Earlier this year Newcastle Council leader John Shipley sent a letter to the Government warning of an “unprecedented” the £40m financial burden facing the authority.

PEOPLE are being invited to have their say on their cuts at www.gateshead.gov.uk. There will also be two consultation meetings on January 19, one at the Old Town Hall at 12:30pm and another the civic centre at 6:30pm.