The view from Newcastle: 'They say if we tax the rich they will all go away. I say let them go. They're no use'

Those basking in the 25-degree sunshine around Newcastle’s Grey’s Monument yesterday were largely oblivious to the cold wind of austerity blowing their way from Westminster. All around them were the symbols of success accumulated during the long boom of the Blair-Brown years.

The city is now seen as a party destination and not a place of derelict shipyards; as somewhere noted for world class galleries and stunning architecture rather than hunger marchers and industrial decline. But with one in three working age people currently employed by the state, Newcastle and the surrounding region has earned a new and unwanted reputation in recent days: the public sector capital of Britain.

Not everyone will take the threat of cuts lying down, of course. Beneath the towering monument to the 1832 Great Reform Act, Shirley Ford, 46, was yesterday gathering signatures for a campaign to oppose the forthcoming “efficiencies”. The part-time primary school parent support worker fears her position will not be deemed to be in the educational “frontline” when the axe falls later this year. Her husband’s job as an adult educator also faces the squeeze in ongoing cuts. Yesterday’s budget already meant they will be £10 a week worse off as a result of changes to family credits and while she said she can understand a Tory Government doing this, it is Nick Clegg’s party’s position which has really shocked her. “The Liberal Democrats have completely sold out,” she said.

Retired college lecturer Paul Baker, 60, could not understand why the Chancellor was proposing to cut rather than tax his way out of trouble. Having been forced through ill health to take early retirement in his 50s he now supplements his meagre income through pension credits. “I live on the poverty line and get by from week to week,” he said. “They say if we tax the rich they will all go away. I say let them go. What use are they?”

But Donna Spence, a 42-year-old mother of one, said she had never claimed family credits and was reconciled to the changes ahead. “The way the economy is, they have to cut things. I know not everybody is going to agree but it is going to affect everybody in the long-term and the country has to get back on its feet.”

According to Professor John Tomaney, director of the Centre for Urban and Regional Development, Newcastle and the North-East’s problems stem back to the 1970s and 80s with the decline of traditional private industry. While the South-East rebuilt through privately-owned service industries, the majority of jobs that were created in the North-East came in the public sector. Even Newcastle’s biggest private employer, Northern Rock, was taken into public ownership. Now the major employers are the universities, the NHS, and Government departments such as HMRC at Benton Park which employs 6,800 – one of the largest workplaces in Europe. As a result the huge cuts would hit this area disproportionately harder, he said. “The region has got massive, massive challenges ahead and we are about to find out how well-equipped we are to meet them. The Labour years were not a complete waste of time but not enough progress was made in closing the socio-economic gap and creating a sustainable economy,” he said.

Beyond the regenerated city centre the problems are stark. In Newcastle there are nearly 40,000 people claiming council-based benefits while the region as a whole has the lowest employment rate in England with household weekly incomes £50 below that of the national average. For that reason those who have jobs are keen to keep them.

At Newcastle Civic Centre, home to 16,000 staff, there was a rally of trade unionists. Speakers were promising to fracture the coalition and force a general election. Hundreds of council job losses were already in the pipeline across Tyneside even before the emergency budget. Among the delegates was Helen Kilpatrick, 35, a part-time domestic at the city’s Royal Victoria Infirmary who is earning £8,000 a year. When she moves in with her partner she faces losing £122 a week in working tax credits under the new thresholds. “There are going to be no more holidays,” she said. “I don’t go out. I don’t wear designer clothes. There is not an awful lot I can really cut back on. I don’t know how I am going to manage.”