Liverpool City Council is set to spend the majority of this year’s increase in Council Tax on services for the most vulnerable.
The city council is ring fencing a total of four percent of the proposed 5.99 percent rise to fund increases in spending on adult and children’s services to deal with growing demand.
Overall, an additional £6 million is being found for children’s services, which will also help fund the recruitment of more social workers to deal with increasingly complex cases of young people coming in to care.
In adult services it will to help deal with growing demographic pressures as more people need support to live in safety and comfort at home.
However when the one percent cost of implementing the proposed local government pay settlement for staff is taken into account, it means only 0.99 percent of the rise is left to cover the cost of delivering other services – far lower than the three percent rate of inflation.
The Council Tax rise equates to an additional £1.34 per week for Band A households, which make up almost 60 percent of the properties in Liverpool.
The funding will help offset £90.3 million of savings needed between 2017 and 2020 due to cuts in Central Government funding.
By 2020 the council will have faced cuts of £444 million since 2010 which, when adjusted for inflation, is a cut of 64 percent of the council’s overall budget over the last decade.
Despite the cuts, the council is also committed to funding schemes to help people living in crisis, including (2017/18 estimated outturn figures):
• £12 million on services for people who find themselves homeless
• £3.5 million shielding 42,000 people from the full impact of Government reductions in council tax support
• £ 2.7 million on almost 13,000 crisis payments to help people with the cost of food, fuel, clothing and furniture
• £2.2 million on 8,300 Discretionary Housing Payments to people affected by welfare reform and hardship
• A £2 million Hardship Fund from 2017-2020 to help residents who are struggling
Mayor of Liverpool Joe Anderson said: “I wish we didn’t have to raise Council Tax but we have no choice if we are to stand any chance of protecting the most vulnerable residents in our city, to offset the cuts in our grant from Central Government.
“The fact is that our total income from Council Tax doesn’t even cover the cost of our spend on adult social care and with rising demand as more people live for longer we are struggling to keep up. We are also battling a growing crisis in children’s social care as more families find themselves on the edge due to welfare reform.
“Big cities like Liverpool which have the greatest needs have been clobbered again and again by Government since 2010 and we urgently need a fundamental review of the way in which local government is funded. Inflation far outweighs the amount we have left over for non-statutory services which means we are forced to make cuts year after year.
“By 2020 we will have lost almost two thirds of the budget that we had back in 2010 and this has had a huge impact on our ability to deliver services. We have 3,000 fewer staff, have transferred some buildings and services across to other organisations and have stopped doing some things that were previously part of our work.
“The perverseness of the way in which the Government has cut our budget is laid bare when you realise that if we’d had the average cut that other local authorities have faced from 2010-2020 then we’d be £71.5 million better off, which would mean we could’ve stopped making cuts last year.
“We know from a previous budget consultation that residents want us to do all we can to protect adults and children’s social care services, so we are abiding by their wishes by reducing the impact on these parts of council spending, as well as protecting people living in crisis.
“But at the same time we have a have a duty to go on delivering major schemes that will bring major economic benefits, such as investment in roads and big regeneration projects like the cruise liner terminal, Ten Streets and Paddington Village which will bring more much-needed businesses and jobs to the city.
“We will be largely dependent on income from business rates and council tax from 2020, so it is vital that we do all we can to attract employers and help create jobs.”
The council’s Invest to Earn strategy is helping offset the impact of the cuts with projects including the lease arrangement on Finch Farm, renting out of space in the Cunard Building and other entrepreneurial deals generating around £3 million per year.
The expansion of house building in the city is also helping – the number of Band D properties is 347 more than forecast – generating an extra £525k per year of Council Tax income.
The council has recently refinanced the PFI deal on Central Library, generating a one-off saving of £1 million which will be reinvested in the libraries service to largely offset a budget cut of £1.3 million.
Reducing the opening hours of the Liverpool Direct contact centre will save £1.5 million.
The budget will be set on Wednesday 7 March.
NEW COUNCIL TAX BANDS
Band Council Police Fire Total
A 1,068.11 118.65 51.04 1,237.80
B 1,246.12 138.42 59.55 1,444.09
C 1,424.15 158.20 68.05 1,650.40
D 1,602.16 177.97 76.56 1,856.69
E 1,958.20 217.52 93.57 2,269.29
F 2,314.23 257.07 110.59 2,681.89
G 2,670.27 296.62 127.60 3,094.49
H 3,204.32 355.94 153.12 3,713.38
Frequently Asked Questions
Why does Liverpool rely more on the Government for funding?
Liverpool City Council is funded in three main ways:
• Government funding – 65% of total
• Council Tax – 12% of total
• Business rates – 14% of total
• Other income (eg: charges) – 9% of total
Northern cities such as Liverpool, where there are higher levels of deprivation, traditionally received higher government grants to compensate for the fact that they have more homes in lower Council Tax bands and raise less income from local residents.
Government funding cuts since 2010 removed this additional protection, meaning places like Liverpool are more badly hit as they are more dependent on Whitehall funding.
In Liverpool, the vast majority of homes are in bands A and B – around 77% – in contrast with the English average, which is just 44%. This means other areas bring in much more of their overall budget in Council Tax.
Council tax keeps going up but services are being reduced – why is that?
Only 12% of our budget comes from council tax – one of the lowest in the country.
Liverpool raises an average of £814 in Council Tax per household compared to a national average of £1,158 and is
ranked 313 out of 326 councils for the average amount raised in Council Tax per household. As a comparison, Elmbridge in Surrey raises an average of £1,967 per household (the highest) and is ranked at number one (2017/18 figures).
To put this into perspective, the total forecast to be raised from council tax in 2018/19 – £167 million – is less than we spend on adult social services – £172 million. The council has many more services and responsibilities beyond this one area.
How much are you proposing raising council tax by?
The Government allows councils to raise council tax by 5.99 percent. A rise of this amount in 2018/19 will bring in around £10.7 million in additional income, which falls far short of the £90.3 million of savings needed from 2017-2020.
Every one percent rise in Council Tax costs an extra 22 pence per week for householders living in a Band A property (the majority of homes in the city)
What funding pressures are there?
Services for vulnerable children and adults are seeing increasing demand:
• Children in care up 11 percent over the last year – a rise of 133 young people
• Pupils with severe learning difficulties up 25 percent
• 30 percent rise in over 65s by 2026, most with at least one long term health need
How is Invest to Earn helping the council?
‘Invest to Earn’ is the Mayor’s way of improving council finances long term, regenerating the city and making us less reliant on Government funding.
We fund projects which grow our economy, create more jobs, build strong businesses and make us a return to support services.
Since 2012, Invest to Earn has:
• Created and safeguarded 2,000 jobs and apprenticeships
• Attracted £150 million of external funding
• Delivered £3 million annually to support essential services
Examples include:
• The Cunard Building, which is generating up to £2 million per year in rent
• Kickstarting the regeneration of the derelict Stanley Dock, attracting £30m of private sector investment, creating 200 new jobs and making £800,000 in interest for the council
• Building the new Exhibition Centre Liverpool and Pullman Hotel, which delivered over £500k in business rates and attracted 113,000 visitors in its first year
• Investing in Finch Farm Training Ground, which is delivering a net profit to the council of £200,000 a year
Why not use up your reserves?
In laymen’s terms, reserves are the City Council’s equivalent of your household savings account.
The city council currently has total earmarked reserves of £106m – but there are strict financial regulations on how we can spend this and much of the money is held for very specific purposes and cannot be used for day to day spending.
We also hold money prudently for insurance reserves, rather than paying out far more in insurance premiums, and hold money on behalf of schools which we can’t spend ourselves.
Just £16.3m (4% of our net budget) will be held as a general reserve for emergencies and unforeseen circumstances. The Government and financial regulators tell us to hold this money.
We are not allowed to use reserves to plug holes in the budget as once it is spent it is gone altogether – and if we did use our reserves it would only fund our services for only a matter of weeks.
We can only top reserves up by using our day to day funding or through providing for future obligations. Because the bulk of the money we have comes from the Government and this has been halved, we will have less opportunity to top up reserves in the future. This will make it even more difficult for the Council to plan financially for future liabilities.
Aren’t events and festivals making large amounts of money for the council?
Not a penny of the economic spend generated through the city’s events and festivals programme comes to the city council.
But the economic impact to the city is vital to the continued growth of Liverpool. It is spent by visitors in our hotels, bars, shops and restaurants, helping support almost 50,000 jobs in the tourism sector across the city region.
It is really important to continue to attract visitors and business to the city – as this will help to create jobs and investment in the hospitality and tourism sector.
The city council puts on these events on because they are vital to continuing to grow the economy and making sure that our residents have access to employment opportunities, as well as raising the city’s profile and attracting investment. Much of the cost is covered by external grants and sponsorship.
In 2017, the council’s cultural events programme attracted more than million visitors and research showed that they spent an additional £18.2m in the local economy.
What is the council doing to help people most in need?
In 2016/17 we spent:
• £12 million on services for people who find themselves homeless
• £3.5 million shielding 42,000 people from the full impact of Government reductions in council tax support
• £ 2.7 million on almost 13,000 crisis payments to help people with the cost of food, fuel, clothing and furniture
• £2.2 million on 8,300 Discretionary Housing Payments to people affected by welfare reform and hardship
• A £2 million Hardship Fund from 2017-2020 to help residents who are struggling
