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The apocalypse that never was: The Labour councils still squandering cash as if there were no tomorrow despite claiming cuts had taken them to the brink of civil unrest

By Tom Rawstorne

PUBLISHED: 22:35, 4 January 2013 | UPDATED: 00:12, 5 January 2013

For more than a century the horse-drawn carriage, all polished wood and gold inlay, has transported the Lord Mayors of Newcastle as they perform their civic duties.

But not any more. Today, the four-wheeled charabanc is up for grabs to the highest bidder, its sale ordered by Nick Forbes, the Labour leader of the city council.

�I will always put people before objects,� he announced late last year. �We have endured two years of savage cuts from this Government with another three to come.
'Savage cuts': With all the talk of cuts, it is easy to be swept away by the feeling that the end of the world is just around the corner

'Savage cuts': With all the talk of cuts, it is easy to be swept away by the feeling that the end of the world is just around the corner

�It gives me no pleasure whatsoever to sell off the Lord Mayor�s coach � but our financial situation leaves no room for sentimentality.�

And that is not the only thing to go in Mr Forbes�s clear-out. All funding to arts organisations in the city is to be cut, ten out of 18 libraries will be shut, parking charges will soar, while spending on litter picking, road maintenance and open spaces will be slashed.

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On top of that, fortnightly bin collections will be introduced and a swimming pool that has produced three British Olympians is closed.

Add in talk of hundreds of job losses and it is easy to be swept away by the feeling that the end of the world is just around the corner. And not just in Newcastle. Earlier this week, Mr Forbes put his name to a letter also signed by Julie Dore, the leader of Sheffield City Council, and Joe Anderson, the mayor of Liverpool City Council, warning that Government cuts to council budgets were so savage that they were creating a �Dickensian� society. All three councils are Labour-run.

�Rising crime, increasing community tension and more problems on our streets will contribute to the break-up of civil society if we do not turn back,� they wrote in a letter to The Observer newspaper.

�The unfairness of the Government�s cuts is in danger of creating a deeply divided nation. We urge them to stop what they are doing now and listen to our warnings before the forces of social unrest start to smoulder.�
A letter was sent to the Guardian warning the cuts were so bad they were creating a 'Dickensian' society

A letter was sent to the Guardian warning the cuts were so bad they were creating a 'Dickensian' society
Many believe that cuts will lead to broken communities

Many believe that cuts will lead to broken communities

Taxpayers across Britain would be forgiven for wondering what cataclysmic blow triggered these apocalyptic warnings.

The answer is somewhat lacking in drama � the announcement of next year�s financial settlement for local authorities. Revealed before Christmas, according to the Government it will see councils� �spending power� fall on average by just 1.7 per cent in 2013-14.

Of course, no one is denying that as part of the drive to reduce the nation�s debts, local authorities have seen their books hit hard. But there is growing concern that by focusing cuts on frontline services, rather than salaries and pet projects, councils are using reduced budgets as a political battering ram with which to inflict damage on the Coalition.

Or, as one Government minister put it, of employing a �bleeding stump strategy� aimed at inflicting the most possible pain on their localities just to spite the Government.

Ministers and other critics of this strategy insist there is still plenty of room to save money through efficiencies rather than by resorting to such cynical measures.

Only this week, the Mail highlighted how councils and state-funded bodies are still spending lavishly on public and sector jobs. Nicknamed Jobzilla after the all-devouring screen monster, this job creation behemoth eats a fortune in taxpayers� money, making a mockery of Left-wing shroud-waving about austerity.

Taxpayer-funded jobs on offer in the past month through the jobs website of The Guardian � the Left�s favourite newspaper � included an �87,000 chief executive for the Nottingham and Nottinghamshire Futures organisation (which boasts it delivers �skills� across the East Midlands); Medway Council in North Kent is advertising for a �40,000 �Corporate Strategy and Performance Improvement Office� to work in its �Performance and Intelligence Hubs; while Waltham Forest Council in East London wants three new officers � a �Head of Employment�, a �Head of Skills� and a �Head of Business� � all on salaries between �48,000 and �60,000.

�Council leaders seem keener on playing the political blame game than facing up to the necessary challenge of balancing the books,� says Matthew Sinclair, of the TaxPayers� Alliance.

�For too long councils were allowed to pick the pockets of taxpayers with scant regard to what was sustainable or fair.

�The language emanating from some town halls suggests that a number of local politicians are in total denial over the need to save money and the pressures on taxpayers� wallets.

�Council tax hits the poorest hardest and nearly doubled in the past decade � council chiefs should focus on how they get the best value out of their sizeable budgets instead of using apocalyptic, but utterly unjustified, rhetoric.�
JObzilla
Jobzilla

Jobzilla: Councils and state-funded bodies are still spending lavishly on public and sector jobs. The job creation behemoth eats a fortune in taxpayer's money, making a mockery of austerity

Strong words. But take a closer look at the accounts and spending habits of the three councils that put their names to the �Dickensian� letter and it is difficult not to agree.

According to Government figures, under the new settlement Liverpool will see a reduction in spending power of 1.7 per cent � spot on the national average. Newcastle fares slightly better and Sheffield slightly worse.

Given the wailing emanating from the three cities, it might be expected that every spare penny is accounted for. But is that really the case?

Take Liverpool City Council. Last March, it had reserves of �146 million, up 24 per cent on last year. In Sheffield, the reserves stood at �43 million, an increase of 13 per cent.

The picture is repeated across the country. Figures from the Audit Commission reveal that in the past financial year English councils� cash reserves increased by �2.2 billion. That is a 15.5 per cent rise, up from �14.2 billion in March 2011 to �16.4 billion this year.

Eric Pickles, the Communities Secre-tary, believes that if now is not the time to use those reserves, then there never will be one.

�While local authorities should maintain a healthy cushion, it�s time for them to dip into their substantial reserves to ensure they protect frontline services,� he says.

The accounts also reveal the vast amounts these councils have failed to collect from debtors. The figure for Newcastle and Sheffield is in excess of �100 million.

In Sheffield, �26.5 million of this comes from uncollected council tax over the past 12 years. That sum alone would pay the wages of 200 teachers in the city�s schools.

And that leads us on to the subject of council employees. Staff costs account for roughly half of all council spending. And while there have been widespread redundancies among local authority staff, there remains a bloated layer of middle management even years of austerity seems to have left untouched.

As the country has been gripped by financial crisis since 2007, you might have expected this to have been addressed long ago.

In Sheffield, the 2011/2012 accounts show there were nine employees earning �100,000 plus, while 391 earned �50,000 or more.

That compares with 2006/2007, when there were just 253 council employees earning more than �50,000. Those earning more than �50,000 increased dramatically over the following three years � three years during which the rest of the country was tightening its belt.

In Newcastle, there is a similar picture. In 2011/2012, there were 277 employees earning in excess of �50,000 and seven earning more than �100,000 (the chief executive gets �198,000 in pay and pensions contributions).

Compare that with the situation in 2007/2008, when 209 earned more than �50,000.
A closer look: Liverpool City Council (building pictured) had reserves of �146million in March last year, up 24 per cent on the previous year

A closer look: Liverpool City Council (building pictured) had reserves of �146million in March last year, up 24 per cent on the previous year

Meanwhile, in Liverpool, figures show that at the end of the 2011 financial year it had 28 employees earning more than �100,000 � the ninth highest number of any local authority in the country.

In other words, for all the talk of �Dickensian� poverty, there is still some way to go to turn back the clock even five years. And it could be argued that councils found sufficient staff and money five years ago to carry out the weekly bin collections and to run the libraries that they are now threatening to axe.

The redundancy packages being handed out have made the situation even worse. Having hired hundreds of middle managers as the country slid into recession, generous pay-offs are being doled out as though they are going out of fashion.

Since April 2011 in Newcastle, the council has handed over �16 million in redundancy payments, having terminated the contracts of some 500 employees.

Of these, 11 received payments of between �100,000 and �150,000 and one a payment of �190,683.

In Liverpool, exit packages in 2011/2012 cost �9.5 million. Of these, 49 were compulsory and 488 voluntary.

Consider by way of example the case of Stuart Smith, the council�s former head of adult and family services. He left his post in April 2011, after ten years� service.

Accounts for that year show that as well as receiving a sum equal to his annual �197,000 pay packet, he was granted �34,500 in pension contributions and nearly �150,000 in compensation for loss of office � a total pay-off of more than �380,000. Within two months of leaving, Mr Smith had taken up a temporary post at Wigan Metropolitan Borough Council, subsequently moving on to become Director of Children and Young People Services at Calderdale, on a six-figure salary.

There is no suggestion that Mr Smith acted in any way improperly, but the sums involved are indicative of the generous terms and conditions that council employees have long enjoyed.

And it is not just the highest paid staff who have benefited.
Eric Pickles believes that if now is not the time to use those reserves then there never will be one

Eric Pickles believes that if now is not the time to use those reserves then there never will be one

Earlier this year, it emerged that Newcastle City Council had spent more than �1 million making 55 staff redundant, only to re-employ them later in different posts.

Those involved received a redundancy settlement on average of �20,000 each. All the employees were allowed to keep the cash because they got their new jobs more than four weeks after losing their old ones (the council insists many went back to work covering short-term assignments and were not �direct council employees�).

Would such behaviour have taken place in the private sector?

The same question must be asked of some of the councils� other financial outlays. In a single month, Sheffield City Council spent �411,000 on consultants. This included �80,000 on management consultants, �209,000 on IT consultants and �1,187 on two ergonomics consultants to check if working environments complied with health and safety guidance.

The same council�s decision to axe weekly bin collections is equally controversial.

Claims it would save �1.6 million in the first year were undermined when it emerged changeover costs such as redundancies would cost up to �1 million, while a further �400,000 had been earmarked to send out leaflets to residents informing them of the changes.

Last summer, another 230,000 forms were sent out to Sheffield residents, asking homeowners for ideas on how to save money � the forms cost �21,000. In Newcastle, a Freedom of Information request revealed how council staff had racked up a bill of �937 in one year phoning the speaking clock.

It was claimed the calls had been made by employees keen to give the impression they were busy working at their desks.

An investigation by the Taxpayers Alliance also revealed the council had spent almost �110,000 on flights between April 2009 and February 2012. As well as international flights to Chicago, Malaga and Santiago, tickets had been bought to travel to Birmingham (�243) and Cardiff (�227). The council declined to provide the reasons for these visits.

Newcastle was also identified as one of the councils handing out generous mileage allowances for staff using their own car for work. Despite the rate set by the taxman at 40p a mile, Newcastle was paying 58.7p a mile in 2008/9. That increased to 60.10p the following year and to 65p a mile in 2010/2011.
Brandon Lewis: 'It defies common sense that a small number of Labour councils are trashing their own city's reputation'

Brandon Lewis: 'It defies common sense that a small number of Labour councils are trashing their own city's reputation'

These annual petrol payments cost the council �1.5 million � much the same as they hope to save by cutting all funding to the arts (a policy that provoked protests from Geordie stars such as Sting and Bryan Ferry).

One could go on and on � the high-speed broadband project into which the city council in Sheffield has poured more than �10 million; the �2.2 million it has earmarked to refurbish town hall meeting rooms; the �8.8 million of taxpayers� money Liverpool City Council spent on a cruise-liner terminal; and the art gallery in Newcastle that is millions of pounds over budget.

Despite such criticisms about the way they go about their own business, the three councils insist that they are right to stand up to the Government.

They claim that their actual reserves are a fraction of the figure quoted by ministers, much of which is earmarked for capital projects.

And they say that comparisons of staff earnings as laid out in their own accounts can be �misleading� because of variations in the way the figures are compiled over the years.

�The fact is that millions of families are hurting and the Government�s cuts in public services and welfare reform will further add to their misery,� the leaders of Newcastle and Sheffield City Councils and the Mayor of Liverpool told the Mail in a joint statement.

�As leaders, we have a duty to stand up for our cities and their people, just as Government has a duty to listen to us when we warn them that their policies are putting honest, decent families into real hardship.�

Over to the Coalition and local Government Minister Brandon Lewis. �It defies commons sense that a small number of Labour councils are trashing their own city�s reputation by predicting chaos and disorder � it hardly sends a signal to invest,� he said last night.

�Labour is playing politics with people�s lives by making political cuts in an attempt to hurt the Government. You can�t get more reckless than that.�