Agenda item

7.1

Members of the Council received a presentation on the impact of austerity on Sheffield by Miatta Fahnbulleh, Chief Executive of the New Economics Foundation, Rachel Laurence, Director, Programmes & Practice of the New Economic Foundation and James Henderson, Director of Policy, Performance and Communications, Sheffield City Council.

7.2

James Henderson outlined in his presentation the impact of the austerity programme on Sheffield. The presentation considered the impact on public services, local government and the City Council in particular; on the people and communities of Sheffield; on jobs and the economy; and set out conclusions as to the overall implications of the austerity programme since 2010.

7.3

He explained that the Government’s austerity programme had reduced the deficit, but new spending commitments in the 2018 Budget had increased spending, leaving a projected £19.8bn deficit in 2023-24. The impact of cuts across Government was and would remain uneven. For example, funding for legal aid had reduced by almost 40% since 2010 and the number of civil legal aid caseloads had fallen 645,000 in the same period.

7.4

Cuts had been uneven by the type of local authority and spending power cuts had impacted most on councils in more deprived areas, whereas increases (eg. social care funding) had been distributed more evenly.

7.5

Non-social care services had seen significant funding reductions and councils had sought to protect the most vulnerable in their areas. Social care now accounted for over 56% of total spend in Metropolitan councils. Sheffield City Council had seen a £430m reduction in its budget since 2011-12.

7.6

He said that welfare cuts had been ongoing since 2011/12 and were expected to continue into the 2020s and over £4bn of welfare cuts were due over the next five years. Tax and welfare changes had been unequal and were inversely correlated with deprivation.

7.7

The impact of welfare reform had been felt across Sheffield but was significantly higher in the more deprived wards. Poverty, particularly amongst children, had increased significantly since 2010. The number of children living in poverty had increased more quickly for some family types. Deprivation in Sheffield had become more polarised since 2010.

7.8

Sheffield City Region’s GVA (Gross Value Added) per head had recovered since the recession but remained the lowest of the ‘Core City’ Local Enterprise Partnership (LEP) areas. Whilst average salaries in Sheffield had grown by 15%, that average masked significant income disparities in the City. Employment in Sheffield had grown since 2010 but the nature of work was changing, with increasing numbers of people in part-time employment.

7.9

James Henderson said in conclusion, that:

1. Austerity had had a significant impact on Sheffield’s people, communities and public services.

2. Austerity was not over, with further cuts to local government and welfare planned.

3. The impact of austerity was uneven, falling more heavily on poorer places and people.

4. The impact of austerity was cumulative and people felt the impact of multiple reductions in service delivery and across more than one year.

7.10

Miatta Fahnbulleh, Chief Executive of the New Economics Foundation, and Rachel Laurence, Director, Programmes & Practice of the New Economic Foundation, outlined in their presentation the effects of austerity and also the potential for change and for different approaches to economic change and inclusive economies.

7.11

Miatta Fahnbulleh stated that the New Economic Foundation (NEF) had argued for a radically different approach to the economy, including a different model and measures of economic success.

7.12

She commented that Local Government had borne a significant proportion of the cuts to public expenditure as part of the austerity programme and that the effects of austerity were becoming apparent. She said that the politics around austerity was changing. Austerity had supressed GDP and would continue to compound structural weaknesses in the economy. There was a consensus that the economy did not work for everyone and economic growth now did not necessarily mean that people were better off, as evidenced by wage stagnation, rising costs of essentials and people borrowing to get by and the numbers of children living in poverty and rising inequalities.

7.13

She stated that she believed things had reached a point at which people would begin to think about change. There were three factors which would drive change, namely the economic reality; politics and political response; and disruption from environmental factors and climate change. The coming together of these factors would force people at national and local level to think about how to change the economy, so that it worked for people and the planet and there was an opportunity for local government to lead the way in this regard.

7.14

Miatta Fahnbulleh suggested that there were some issues and principles which needed to be considered, including, the environment; improving lives of people in communities; giving people a bigger stake and ownership of their local economy; a bigger role for businesses in contributing to social and environmental outcomes; decentralising more economic power to local government; and to engage with and empower local communities.

7.15

She said that there was a question of how this might be done i.e. how to create inclusive economies; and NEF had done work with other local authorities in this regard. She stated that there were some key building blocks to begin with. These included: clarity about what a strong local economy looked like and economic, social and environmental outcomes; co-producing the local economy with local people; mapping investment money flows across the local economy so it can be made to deliver; working with other organisations with a vision for change in the local economy and use of procurement and local investment and supply chains; working with businesses and considering the business contribution to the local economy, jobs, infrastructure etc; and use of local finances.

7.16

Rachel Laurence outlined three concepts which were frequently discussed when talking to organisations. These were: defining what was the local and regional economy; increasing growth; and community wealth building.

7.17

She then summarised three approaches taken in the last few years which were practical approaches which councils could take. These included:

·     community economic development to generate local economic activity, including technical and business support.

·     fine tuning and considering certain questions to ask of any programmes of investment, development or infrastructure programmes; such as how it will distribute wealth in the community, and the extent to which there would be local jobs, local supply chains and local investment and ownership; or the secondary economic benefits of other sectors such as financial services.

·     redesigning an economic strategy which brought investment into sectors that provide the most jobs and may be labour intensive.

7.18

Miatta Fahnbulleh summarised the presentation and emphasised the important role that local government might take in leading economic change, whilst recognising that it was a big undertaking. She said that the New Economics Foundation was keen to work with local authorities in this regard.

7.19

Members of the Council asked questions and commented upon the issues outlined in the presentations, as summarised below:

7.20

A comment was made that in focussing upon different measures of success, there was at the same time a need to bring about economic growth and increase tax revenue through high growth sectors as well as growth in local sectors. A remark was also made as to the reasons for people voting to leave the European Union.

7.21

An observation was made that a challenge in welfare reform was to make sure there was sufficient income for families and that there were some poor practices such as people ‘working off the clock’. A question was posed as to what local authorities could do to encourage better employment practices and get real issues relating to austerity back on the agenda.

7.22

A question was put as to what specifically could be done locally and as to what changes the Council should make.

7.23

In response to the above points, Miatta Fahnbulleh said that growth in itself would not deliver for communities. It was acknowledged that the reasons for outcome of the Brexit vote were complex. There were structural problems in the economy and austerity had compounded existing problems, such as wage stagnation for a proportion of the population. She said it was recognised that there were genuine problems in the economy and it was important to focus on real issues. Politics would demand change and there would be contributions at both national and local levels.

7.24

As regards what could be done, she said there was some exciting work in Sheffield e.g. work with local institutions and the coming together of a common vision and initiatives including local procurement. Further thinking might be done as to how to ‘sweat’ investment in the local economy, creative approaches to business support and building links between community enterprises to other small and medium enterprises. There was also a question of who owned the economy and the use of the Council’s procurement and investment powers to create co-operatives.

7.25

James Henderson responded that the City Partnership Board had developed the inclusive economy framework and the Council had produced the ethical procurement policy. Whilst there was a lot to do and build upon, the City was starting from a reasonable position. There would be reflection on what had been said in the presentations at this meeting.

7.26

A comment was made that austerity was a political choice and it was difficult to be optimistic with regards to the Government’s approach and a drive to not spend in communities and reduce benefits. A question was asked concerning the uncertainty as to how Brexit might affect circumstances locally for local communities and how local communities would move on from it.

7.27

An observation was made as to examples of where work had been done with businesses such as Boeing and McLaren investing in the City and the Council as regards supply chains. There had also been successful initiatives such as in relation to ethical procurement and the apprenticeship programme.

7.28

A further comment was made that there was more that could be done concerning the creation of a balanced range of local employment for people regardless of where they lived. Planning powers as they were at this time did not always help to develop balanced economic activity at a local level or facilitate activities and certain resources and powers were required. There were also issues in relation to a City Region deal.

7.29

A statement was made concerning the City Region and options of working more closely with other local authorities, such as proposed in a Yorkshire wide devolution deal. A question was asked about such a regional deal and levering powers and funding from government, learning lessons from other regions. A question was asked about the effect of Brexit or a no deal scenario and its economic impact.

7.30

Rachel Laurence responded that working on a small scale through local and micro activity might not achieve such a scale of change as larger investments but there was a challenge as to how the economy as a whole could function well in peoples lived experience.

7.31

What might be explored in a definition of ‘local’ was not necessarily a geographic balance of employment but a better distribution of jobs amongst more ordinary people. It was not a zero sum gain between two communities but was instead the distribution of jobs, income and wealth distributed to ordinary people and the retention of wealth within the economy of the area.

7.32

A comment was made concerning the effect on cities of the austerity programme and increasing child poverty. Thought could be given to what was being done, and what more could be done, to stabilise the economy and make it more sustainable. There had also been significant damage to the economy through the actions of previous governments and which adversely affected the local economy’s ability to recover from events such as recession.

7.33

It was noted that the Council was bringing contracts back in-house, where possible, so as to improve services and there was a benefit in money remaining in the city economy. It was important that procurement was ethical and the Council would continue to review policy so as to make sure of the best social value and value in the supply chain. The Council was also working with small and medium businesses and it spent a significant proportion of expenditure with local suppliers and small businesses.

7.34

Comment was made that there was also more that could be done as regards co-operatives and with regard to the use of the Council’s spending power and work was being done in that regard.

7.35

It was stated that there was a real impact of austerity on people, such as use of foodbanks and the Council was looking at how in the future it would be able to continue to provide support for vulnerable families.

7.36

A question was raised as to what comprised good employment, including something which gave people meaning and identity and comment made that focus might be given to what comprised good meaningful employment.

7.37

A question was asked as to whether there were measures other than GVA/GDP to reflect issues such as poverty and growth and that benefited all people in an inclusive economy.

7.38

A comment was made that the City was divided with five wards in which over fifty percent of children lived in poverty and different solutions were required to deal with such problems.

7.39

A further comment was made about seizing the potential in local communities and investing and improving people’s livelihoods at the same time as developing a strong economy and growth. 

7.40

It was noted that, at the same time as activity to draw in big investments in the City, there were also small initiatives in communities which had developed through a programme of incubation and which helped to build local resilience. A question was posed as to how change would be possible in the context of austerity and scale of financial cuts experienced.

7.41

Miatta Fahnbulleh commented that, whilst it was difficult after a period of austerity, it was possible to find space to do things within what the City already had and in which the Council or its partners were already investing and to maximise the outcomes of investment.

7.42

RESOLVED: That the Council notes the information now reported in relation to the impact of austerity on the City of Sheffield, and thanks Miatta Fahnbulleh, Rachel Laurence and James Henderson for their presentation.