I want to start by talking about our radical past, and how I believe that passion and spirit is intact and is key to helping us prosper over the years ahead.
You know, there’s a mistaken perception put about by some that local government is always reluctant to embrace radical change. That we’re the last bastion of outdated working practices, a barrier to progress and out of touch with the ‘real world’.
The truth is utterly different. Newcastle is forging a reputation as a place that’s not afraid to do things differently. In the face of the biggest budget challenge for a generation we’ve had to ‘think different’ to save libraries, swimming pools and children’s centres from closure.
We’ve been at the forefront of the argument for cities to have more control over the money they raise, creating jobs and connecting people back to decisions taken on their behalf. Newcastle is one of the 8 English Core Cities – along with Manchester, Birmingham, Nottingham, Leeds, Sheffield, Bristol and Liverpool – and two years ago we formed a political Cabinet of leaders to accelerate the pace of change. As Vice Chair of the Cabinet I am proud to be leading the Core Cities work on public sector reform – arguing the that local government and all public sector organisations to be given the freedom to pool budgets and spend them as they, not some distant Whitehall mandarin, feel fit.
We’ve been pioneering this work here. We’ve created the UK’s first Culture Fund, our initiative to establish a culture of philanthropy towards our city’s arts institutions.
We’ve continued to build, helping to change our city’s skyline by partnering with others on developments like Science Central and Stephenson Quarter.
We’ve embraced and worked with the Government to deliver the Troubled Familes programme making a real difference to hundreds of lives blighted by unemployment, poor school attendance and alienation.
I want to place work like this into an historical context. Two centuries ago, in cities across the North people started to come together to talk about the big issues of their time. The coffee houses where people from Hall Green, Gorton or Grainger Town met were the birthplaces of movements that changed British society for the better. Those reformers had that precious resource that tends to galvanise any social movement: anger. Anger at injustice and a vision for a better, fairer world. All of England’s core cities, including Newcastle, played a role in achieving badly needed social change, fighting against an establishment that – when not indifferent – was actively hostile.
And sometimes they did fight. They were home to revolts and uprisings around everything from rising food prices to the threat of machines in textile mills. But as well as taking part in the occasional violent revolt, our radicals engaged. They published pamphlets, formed movements for change, lobbied their often hopelessly corrupt MPs and gradually achieved real change. They formed power companies, transport boards, housing corporations. They invested in clean water supplies and sewers, built schools and provided health care facilities. They were the radicals of their day, creating the concept of municipal local government.
Today, here in Newcastle, that public spirited legacy is in great danger. Having already implemented the most severe cuts to our revenue budget in a generation we now face a least three more years of austerity.
The challenges and potential reductions to services are difficult to contemplate. My argument is that if the city council is to survive it needs much greater freedom and flexibility from central government to take charge of our own destiny.
Less than one fifth of the council’s budget is raised through council tax. The rest comes from government grants and other funding handed out via formulae that are often changed at the stroke of a ministerial pen. Yet probably about 90% of what the council does is required to be done by Acts of Parliament. As a consequence, when government funding is cut, real people suffer – buildings close and services reduce. We need to fix the broken relationship between income and expenditure, with much greater local control over both.
Let me give you some examples of how we want to do things differently.
We’ve all seen it in Newcastle, the devastating effects of long-term unemployment. The solutions aren’t simple, it’s not a case of ‘get on your bike and find work’.
Unemployment in Newcastle is caused by a complex mix of barriers to opportunity, poor health, poor housing, poor skills, job insecurity and an under-performing economy. Although other areas suffer similar symptoms, the causes are different. You won’t find the same mix of challenges in Newcastle as in Derby, Brighton or Cardiff.
That’s why these challenges require local solutions, tailored to the needs of individuals and their communities. They can’t be addressed through contractual relationships with prime providers covering whole regions, through complex payment-by-results mechanisms which distort activity towards those least expensive to help.
We all know the nationally commissioned Work Programme hasn’t delivered to expectations. From the core cities, on the current level of performance, we know that half a million people will complete the programme without finding work.
But we know locally delivered programmes get better results. While the national Youth Contract programme underperforms, the locally delivered pilots in Leeds, Newcastle and Gateshead are delivering results that are nearly twice as effective. Yet this freedom wasn’t given to us; we had to bid for it, in competition with other areas, in effect having to beg permission to use our own money.
We’re also prepared to take more responsibility for the other big challenge of our time, our ageing population.
Make no mistake, it’s fantastic that medical advances, better diet and better technology mean people live longer, but it presents us with a number of practical problems.
That’s why we’ve been at the forefront of the age friendly city movement. We value the tremendous social and economic contribution of our elders. We’re willing to redesign services and think differently about how our cities are designed. We see an ageing society not as a burden but as an economic and social opportunity.
But we also face the downside. Spiralling budgets for social care, creating unsustainable costs for councils, constant arguments with providers over money and reduced spending on preventative services that keep older people healthy and out of hospital.
The core cities including Newcastle, are willing to take responsibility for a new approach. We need to break through the institutional barriers that get in the way. A more locally-accountable health and social care service, a whole system approach which saves money, and improves care and life chances.
The evidence has shown that integrating health and social care could save up to 15% on delivery costs, for reinvestment into services which improve outcomes for our most frail and vulnerable citizens.
Two examples of modern radicalism in Newcastle – unemployment and an ageing society. But if we are prepared to be radical, we must persuade Whitehall – which has its fair share of outdated working practices and methods – to do the same and join us on the journey.
I believe we’re starting to win the battle. Last month the Chancellor made major commitments to northern cities, and a few days later a report by Lord Adonis – no doubt heavily influenced by his work in the North east – reinforced the view that England’s cities are major economic powerhouses with enormous untapped potential.
It is no accident that we are beginning to see an emerging cross-party consensus behind the idea that devolving powers and resources to cities like Newcastle will help us create more sustainable long term growth.
There is an undeniable need to break free of our overdependence on London as the focus for the UK’s economic growth. It results in an unbalanced and fractured economy. All of us have the potential to contribute – we just want the freedoms to play our part.
Many organisations like the Centre for Cities, together with all the English Core Cities, have been campaigning long and hard to encourage Whitehall to allow us to have greater control over how the taxes we raise are used to deliver the best outcomes for local people.
We believe that we have an inarguable case – and our goal is the ensure that this is reflected in the manifestos of all three major political parties ahead of next year’s general election.
We make this case not because we because we believe cities should be independent of central government – but because we are a vital delivery partner for a government seeking to accelerate growth. Our cities are at the forefront of social and economic change. We have led the way on everything from manufacturing technology to public health. Cities can be the engines of growth but they must be freed from the shackles of government control if they are to truly reach their potential.
Let’s look at some of the facts. The core cities together with their surrounding urban areas:
- Are home to 16 million people – a third of the population of England.
- Generate 27% of England’s wealth (that’s more than London).
- House half the country’s leading universities.
Yet in England 95% of all taxes raised in cities 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 decisions makers to pursue local priorities.
This centralist approach is in stark contrast to the rest of the world – German cities control six times more of the taxes they raise, in the USA it is seven times and in Canada ten times more of locally raised taxes are controlled by the authorities that directly represent the local tax payer. In other countries it is the norm for major cities to outperform the national economy. In the UK only London does this consistently.
English cities lack the level of financial control enjoyed by our international competitors. We are not competing on a level playing field. In a Global marketplace we are competing against other cities for investment and jobs hamstrung by Whitehall meddling which stifles local ambition and innovation.
This matters because I defy any Whitehall mandarin or politician to surpass the passion we feel for our city. I defy them to demonstrate a greater understanding of the needs of our local communities and businesses. We understand the nature and needs of Newcastle and the North East better than anyone else.
Newcastle has a sense of pride and passion that is unsurpassed. Our pride in place is what binds us all together. It is what makes us care for each other and creates the opportunity to define a stronger sense of what a cohesive society in a great city can be.
The likelihood of some form of devolution in Scotland, no matter what Scots decide in September, adds another dimension to the debate. If greater powers and financial flexibility are good news north of the border, why not in the great English cities? The English Core Cities are already in close dialogue with Edinburgh and Glasgow to discuss how we join together to develop the devolution debate in the interests of us all.
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.
Independent forecasts demonstrate this could mean an additional £222 billion and 1.3 million jobs for the country by 2030. That is like adding the entire economy of Denmark to the UK. This could also mean and additional £41.6 billion to the government in taxes from increased jobs by 2030 – enough to pay off almost half the national deficit. And that’s not by raising the level of taxes – just by changing how taxes are invested.
I have no doubt that the government would argue that it is already on the road to empowering cities – through the local growth fund and City Deals.
Whilst these are welcome developments, we should remember that local growth pot of around £2 billion is a drop in the ocean compared to Lord Heseltine’s original recommendation that £70 billion be devolved from Whitehall to local areas to get the economy moving. Persuading Whitehall mandarins to relax their iron grip on the purse strings remains one of biggest challenges.
But we must make the most of what is available and it would be churlish not to acknowledge the potential we have been able to unlock through the City Deal which I was able to negotiate for Newcastle. The deal allows us to borrow to fund development and use the additional business rates by the investment to pay the loan back. This releases £92 million to invest in our cities future, generating a massive £1 billion return and 13,000 jobs over the next 25 years.
And already we are beginning to see the benefits – the development of the Stephenson Quarter moving forward at pace; Science City, the biggest city centre investment site outside London, rising up on the site of the old federation brewery; and Central Station transformed into a modern gateway to a vibrant city.
The City Deal has also unlocked transport improvements around the city with improvements to key junctions on the A1 – particular at the UKs most congested road junction at Lobley Hill which will be improved in the very near future.
Modern cities need modern and effective transport systems if they are to remain competitive and it was pleasing that all of our proposals for upgrading Newcastle’s road network were successful in the recent round of local growth fund allocations. This will contribute to one of the most significant transformations of our road network for a generation as we implement a plan to improve links around, across and within the heart of the city. Much of this work will begin in the year ahead. The long term benefits will be enormous – but inevitably there will be some short term pain for motorists as we carry out the work. Please bear with us!
A key part of our city’s transport future will be linked to cycling. I’m proud that we’ve managed to lever in almost £6m from central Government through the Cycle City Ambition Fund. There will be again be short term disruption while we build the infrastructure, but again I believe the pay-off – in terms of easing congestion and public health – will be enormous.
Meanwhile, good work is happening now. Newcastle’s growing reputation as a cycle-friendly place will be underlined this weekend when thousands of cyclists take part in SkyRide on Newcastle and Gateshead Quayside.
And our Go Smarter campaign continues to tempt more and more people away from the car, easing congestion at peak times and encouraging healthier and more active lifestyles.
Another vitally important part of our future plans is to create more places for people to live within our city. One of the reasons why our roads are so congested at peak times is because a lack of family homes within Newcastle means many people have to commute from outside the city for work. The unprecedented demand for the first homes to be built in Scotswood is a real sign that there is untapped potential in our housing market.
That is why the proposals for new homes in our Local Plan are so important if we are to plan effectively for the expected growth in our population. The plan is currently being examined by a government appointed planning inspector. There are still some issues to be resolve – but we hope the plan will be adopted early next year to provide a clear blueprint for how our city will develop and grow in the years ahead.
We know we are going through tough times – but this is not a time not despondency. Despite what some national journalists might have you believe we are no Detroit. Nor are we teetering on the brink. There is no denying that our city and our region have challenges that we must face up to and address. But we also know that we have the boundless ambition, energy talent and passion to fight for our city and our region.
After a lengthy gestation the North East Combined Authority is up and running and taking responsibility for the big strategic decisions that impact on skills, investment and transport across the region. Our Local Enterprise Partnership is bringing political leaders, public policy makers and business brains together to make the right investment decisions for the North East – on the back of a coherent Strategic Economic Plan based on consensus not competition. We have the structures and governance in place to take full responsibility the decisions that impact on our local community. All government needs to do is release the brake to allow us to travel further and faster.
Here in Newcastle, and in all the other Core Cities, we are taking responsibility for shaping our own future. Together, through our ‘City Centred’ campaign we are making some fundamental requests to Government, this one and the next:
Extend the concept of the Local Growth Fund for capital funds – but make it big enough support cities and regions to make big decisions.
Lift the Housing Revenue Account borrowing cap so that cities can fund more housing development.
Generate certainty with greater local control of public spending and budgets that are the length of parliaments.
Devolve property taxes to cities and enable them to control other local taxes.
Consider the formation of a Local Investment Bank across all the core cities
To do this we need “place-based” settlements for public spending in each of our major cities, rather than the fragmenting of scarce resources through multiple Whitehall departments and agencies. And we recognise that this approach requires a culture change in our cities, as well as in Westminster and Whitehall. We have been working hard with our partners in Newcastle to develop our own thinking about how we pool our resources, capacity and knowledge to address our challenges.
I’ve talked tonight about how we can prosper if we have more control. But it’s no use having more freedom if there’s a vacuum of ideas. It’s no good if all this discussion simply creates an expectation of greater public sector involvement or intervention. Tonight’s debate must also be about what you, the collective leadership of this city, can do to make a difference, however small, to the state of Newcastle. It’s about how we work together.
Tonight’s hashtag is Think Newcastle and that’s exactly what I want you to do. Think about what you can do to make our city an even better place to live and work. Think about your role in our city’s civic life.
Think about the apprenticeship you can offer, the schools you could work with, the campaigns you can back, the letter to an MP or decision-maker you can write, the local initiative you can sponsor.
Think about what you can do to make a difference and continue our radical heritage well into the 21st century.
Now is a time to be bold, to think different, to think Newcastle.
All our young people deserve a chance to achieve and reach their full potential.
That’s why today, we’re announcing our own Newcastle Learning Challenge, designed to run alongside a North East Local Enterprise Partnership (NELEP) initiative to raise standards and attainment across the North East.
The city-wide challenge will be co-ordinated by the council in partnership with our family of schools, businesses and higher and further education.
We want to focus on improving results among children who come from disadvantaged backgrounds and reducing the numbers of young people who are not in education, employment or training. We need to narrow the gap in attainment between the most disadvantaged children and their peers, which is particularly apparent between key stage two and key stage four.
It will run in tandem with the Government-backed NELEP plan to raise attainment across the schools network. We all want to make sure as many young people as possible get on and achieve good qualifications.
We will now form a steering group to develop a vision and design the structure for the Newcastle Learning Challenge and the group will discuss its proposals at an event to be held later this year.
It’s worth remembering that the Ofsted ratings of Newcastle’s schools are well above the national average, but not all young people in Newcastle are benefiting from this improvement.
We know the attainment gap between children who are eligible for free school meals and children who come from better off backgrounds is much wider than the national average.
Our numbers of young people not in education, employment or training are also unacceptably high.
I want the Newcastle Learning Challenge to get to the bottom of why this is and what we can all do to solve it.
Getting more young people into education, employment or training is fundamental to creating our ambition for a working city and tackling inequality. It means a better future for everyone.
Why I welcome the Adonis Report
It’s great to see an emerging cross-party consensus behind the idea that giving devolved powers to cities like Newcastle will help us rebalance our fractured economy and create more sustainable, long term growth.
Last week the Chancellor made major commitments to northern cities, and yesterday’s report by Lord Adonis – no doubt heavily influenced by his work in the North East – reinforces the view that England’s cities are major economic powerhouses with enormous untapped potential.
It hasn’t always been this way, our cities were once at the forefront of social and economic change. We led the way on everything from manufacturing technology to public health.
But while other countries have built on this and realised the potential of a balanced economy – economies that aren’t centred narrowly around a capital city – we’ve allowed it to slip from our consciousness.
The result is that today, we have an unbalanced and fractured economy that I believe helps to hold our cities and our people back.
But there is an answer, and it involves inviting the Government to work in partnership to deliver more and quicker. We want more powers so we can compete on a global stage.
In Newcastle we’ve already seen how loosening the ties between ourselves and Westminster is starting to create jobs and boost our city’s reputation as a place to do business.
Our City Deal, allows us to borrow to fund development and use the additional business rates to pay the loan back. The City Deal will see us invest £92m in our economic future to generate a massive £1bn return over the next 25 years.
And we’ve made a commitment as seven councils in the north east, to join together to create a combined authority to create opportunities for a population of over 2 million, working with business and our universities to create more and better jobs.
Now imagine the potential if, as the Adonis report recommends, the North East Combined Authority received control over full revenue from business rates.
It would pay for better infrastructure, better housing, better jobs and more support for business, and we could do all this without costing the taxpayer a penny more. Crucially, more decisions taken locally would not only promote growth but breathe new life into local democracy.
It’s time we unleashed the power of cities and loosened the restrictions placed upon them by central Government.
People who work in Information Technology are passionate about what they do. They have a strong affinity with the region; have chosen to grow their businesses here, and are creating good quality jobs, putting the region on the map.
Over a century ago industrial pioneers such as George Stephenson, William Armstrong and Joseph Swan were also putting the region on the map with amazing inventions – the railway, hydro-electricity, and the light bulb, which still feature in our everyday lives.
Back then the North East was playing a key part in the birth of the industrial revolution.
And once again, I believe, the region is in the forefront of another revolution – an Information Revolution – fuelled not by steel or by coal but by intellect, creative thinking and technological advance – advances which make all of our lives easier.
The North East has one of the largest and fastest growing technology clusters anywhere in the UK outside of London. There are more hi tech company start-ups in the North East than in any other region.
The industry employs between 25,000 and 30,000 – 8,000 in Newcastle and Gateshead alone – with an annual turnover of £866m.
Newcastle is home to Sage Plc which employs 1,500 people locally. Three of the biggest games developers have significant bases here.
At Newcastle University’s Culture Lab they have built an Ambient Kitchen or “smart kitchen” fitted with sensors that are designed to help people with cognitive impairment, such as dementia, live independently.
The university is involved in 150 European research programmes and collaborates with more than 1,700 organisations. Its new research centre is developing emerging technologies such as grid and cloud computing in the region.
Many major brands have extensive back office ICT teams in the region, including British Airways, the AA, and Hewlett Packard. HMRC are opening a new digital centre in Newcastle providing digital tax services that will make it simpler and faster for people and businesses to manage their tax affairs as the Government presses ahead with Digital by Default – but what about the council? Well, we too are playing our part.
Our Go Digital Newcastle broadband programme will make Newcastle a major digital power, creating a £150m boost to the economy, protecting and creating jobs.
By providing access to superfast broadband, 97 per cent of homes and businesses in the city will be connected by the summer of 2015, making Newcastle one of the UK’s super-connected cities, with one of the fastest broadband speeds in the country. We have also launched a voucher scheme for businesses, inviting them to apply for up to £3,000 of vouchers to get connected to superfast broadband.
Compared with the South East we have low operating costs, enviable purpose-built units and a skills base that will make us an attractive region for companies to relocate to.
And for graduates there is a quality of life that they wouldn’t get anywhere else in the country. A well-paid job with an average salary of £30,000 that enables them to pay off their debts, buy a home and in time perhaps set up their own business – all of this just a short journey away from the beautiful countryside and stunning coastline.
The region is a hotbed of talent, a mix of successful start-ups and global companies backed by universities with worldwide connections in cutting edge research in computer science, medicine, renewables, creative and digital industries.
The IT sector is delivering; in high value jobs; growing the private sector; and diversifying our region’s economy. We can be proud of our IT credentials.
If the council is so strapped for cash, why is it planning to spend so much money on refurbishing the Civic Centre?
It’s a question we’re getting asked a lot at the moment, and I thought it was worth taking the time to explain.
Over the next few years we will continue to face considerable financial challenges as we comes to terms with reductions in Government funding and rising costs.
To help meet these challenges it is essential that we make the most efficient use of our buildings – in particular our headquarters accommodation at the Civic Centre.
The council has reviewed all of its office accommodation across the city and aims to consolidate as many staff as possible in the Civic Centre by remodelling the building to make the best use of the available space.
Because of the cuts we now employ far fewer people than we have done before and it makes sense to bring this smaller workforce together in one building. The refurbishment will also improve energy efficiency and address longstanding repairs and maintenance problems.
By investing in this way the council will save more than £2m every year through reduced energy bills, lower repair costs and the closure of outlying offices that are no longer needed.
It is better to consolidate our workforce and invest to deliver the accommodation we need, rather than continuing to waste resources maintaining an office estate which we don’t need and which no longer meets our requirements. We are also using the money from property sales to fund our capital programme, including the proposed refurbishment of the Civic Centre.
If we don’t do the work to bring it up-to-date, our Civic Centre, an iconic grade two-listed building in the heart of the city, would quickly become unaffordable.
There would be a gradual decline in our office estate with continuing high costs and a growing backlog of maintenance and repair work which the council would be unable to fund.
The Civic Centre will be refurbished to a reasonable standard to provide a modern office environment for council staff and we realise how important it is to ensure that the standard of accommodation provides good value for money for local taxpayers.
The refurbishment will also allow the council to rent out some space in the building to key partners generating income and helping us to work more closely with other important organisations in the city. We have already let out some space to other organisations and this is now bringing money into the council and reducing the pressure on our budgets.
We will also continue to make sure the Civic remains one of the city’s premier conference venues, it’s a valuable source of income for us.
It is important to note that we will not do the refurbishment all at once as we need to test our assumptions on the costs of the work and of the predicted energy savings we can make. We are, therefore, planning to improve one floor in the tower block first and then carefully monitor the cost savings.
Investing money now to save costs in the future is a sensible way to secure the economic future of one of Newcastle’s most important buildings. The Civic Centre is an asset of real social and economic value to the city. It needs some care and attention now to ensure it will be viable long into the future.
UK cities have led economic growth for more than 200 years, creating public services and driving social change. They have helped to invent the modern world.
Newcastle’s industrial pioneers and social reformers have shaped our roads, our railways, education, policing, and water, and tackled some of the great injustices – slum housing, hunger and disease.
In many ways city-led growth is happening now. Newcastle has struck a deal with Government that allows us to borrow to fund development which will generate additional business rates that enables us to pay the loan back. In reality it’s investing £92m in our long term economic future to generate a £1billion return over 25 years. We have earned investment in the marine and offshore sector, with the potential to create 8,000 jobs. And, our Youth Contract Pathfinder is developing locally-shaped solutions to support 16-17 year olds into employment, education or training. Forty seven per cent of those on our local programme have progressed into employment or training, compared to just 27.5 per cent nationally, proving that some things are best done at a local level.
So, we are not seeking to convince Government that cities can be a major driver for growth – that is proven. Nor are we asking permission. Growth and innovation are the role of cities up and down the country. Instead, we are inviting Government to work in partnership with City Government to deliver more and quicker. We want more powers so we can compete on a global stage and ensure UK cities are powerhouses of growth and innovation.
So what difference will this make to people’s lives? It will help us provide better infrastructure, housing, employment, skills and support for businesses, along with a single framework for skills co-ordination, devolved budgets and better co-ordination of education providers; reducing duplication, saving money, getting more people into work and matching employment programmes to the needs of the labour market.
We also need greater financial freedoms, greater devolution of taxes, allowing us to retain a greater share of our growth proceeds for local reinvestment over a longer period of time. We are working with other Core Cities to make the case for shifting tax revenues away from Whitehall and into local communities.
As Cabinet Member for Public Sector Reform on the Core Cities Group, I am exploring opportunities for improving the wellbeing of our communities through joined up services. We want a place-based approach, integrating knowledge, management and delivery of services at all levels. This should be accompanied by shared accountability for public resources, integrating funding regimes with Government and personalised services that target support at the most disadvantaged.
Our North East Combined Authority is an example of stronger governance structures taking responsibility for strategic transport, economic development, jobs and skills. NECA will ensure that institutions work better together, improving transparency to aid private sector investment and decision making.
We need clearer lines of communication between local leaders and Government ministers; public service reform and a rethink on how public funds are spent; greater freedoms from Government restraints and more self-sufficiency at a local level to enable cities to plan for, and deliver, long term financial stability.
Our vision for economic growth goes hand in hand with wider public service reform. Investing in tackling inequalities and reducing complex dependency are vital to fulfilling our cities’ economic potential. Our predecessors in the 19th and 20th centuries knew it. We know it. So let’s get on and do it.