City outlines scale of budget cuts

Liverpool City Council has announced that funding for some services will be cut by 50% over the next three years to meet the £156 million of savings required.

The city faces its biggest budget challenge to date, following £173m of cuts already made over the last three years. By 2016/17, the city will have seen government funding cut by 56%, in real terms, since 2010/11.

Last month, Mayor Joe Anderson outlined his strategy for dealing with the reductions – by developing a three year strategic programme of reductions in funding in order to give some certainty to residents about how services will look in the future.

Today he has announced that all “mandatory” services – those which the City Council is legally required to provide – have been asked to find savings of up to 25%. These include adults and children’s social care, environmental health and refuse collection.

And those which the council is not legally required to provide – so-called “discretionary” services – such as leisure centres, cultural events and regeneration, have been asked to find budget savings of 50%.

Mayor Joe Anderson said: “This is really unpalatable and not what I or any of my team came in to politics to do. I know people will be worried about how they may be affected, and the truth is it will impact on every service in the city.

“The stark reality is that it will mean less of absolutely everything, whether it is libraries, leisure centres, children’s centres or social care buildings.”

But Mayor Anderson said he is committed to support growth and innovation in the city, to ensure Liverpool’s future remains bright and sustainable.

He added: “Despite the challenges, it is vital we bear in mind there are still an awful lot of good things happening in the city – whether it’s the International Festival for Business or the 1,000 new private sector jobs we’ve helped attract recently through firms such as H2 Energy, BAC Mono, BT and Amey. We are working every single day to bring in more of those investment and employment opportunities.

“We are also looking at innovative ways of delivering services and dealing with the budget challenges we face. Just in the last few days, we have managed to secure the future of our two pay and play golf courses while saving the £300,000 per year we were spending in subsidies. We achieved this on the same day we launched our new expanded e-library service which is a really cost-effective way of ensuring people across Liverpool can access their library service 24 hours a day, 7 days a week.

“Another decision I am really proud of is the purchase of the Cunard Building. In just a few short years that investment will bring an income into the city council, and that is money we can plough directly back into services for the benefit of everyone. These are the key decisions we are making now which will make our budget process in the future a little brighter.”

The city council recently launched a no-cost social media campaign on Twitter to give residents a greater understanding of the challenges the city faces, how it is allowed to spend its finances and where it currently uses its cash.

Almost 8,000 people have already visited the council’s online budget simulator to look at the issues we face and suggesting where savings should be made. It can be found at http://liverpoolcc.budgetsimulator.com and will be available until this Friday (17 January).

Details of the proposals are currently in development and are expected to be announced next month, followed by the city’s budget meeting on March 5.

FINANCE MYTHBUSTER

Why don’t you cut the number of staff and managers to save money?

The senior management team has been halved, saving £6 million per year. We have also reduced the size of our workforce by 1,600 through a voluntary severance scheme.

What are you doing to collect unpaid Council Tax?

Liverpool City Council’s Council Tax collection rate is as good as other large cities, at around 95 percent. However, unlike many other councils, we do not write off old arrears which means that the amount of Council Tax debt that appears in the accounts is far higher than other councils. But any comparison is meaningless as they treat their debts differently and have written off any chance of recovering the money. Last year, Liverpool brought in £8.5 million in historic Council Tax arrears and £381,000 of Poll Tax debt, which was then invested in services. This is money that the council would not otherwise have had.

Why don’t you dip into your reserves to cover the gap?

The city council has reserves of £115m, of which £90m are already earmarked for specific purposes. It includes £8.5m held on behalf of schools and £8m for joint funded projects with our health partners. The remaining £25 million (5% of our net budget) is a general reserve for emergencies and unforeseen circumstances, and is the minimum recommended by the Audit Commission. The total amount will halve over the next three years as we pay bills such as legal claims and other committed future expenditure. Councils are not allowed to use reserves to plug holes in the budget as it is a one-off fix which just causes more problems in the future – once it is spent it is gone altogether.

You’ve recently announced that you’ve bought Everton FC’s training ground and the Cunard Building. How can you afford to do that?

The council is not allowed to borrow money to pay for day to say services, but can do so if it is an investment that generates a return, such as rental or lease income. The revenue stream return can then be ploughed back into providing essential services. The council will only invest in schemes when it is confident it will generate a return, and the risk is minimal.