Council to set three year budget saving £156 million
Liverpool City Council is to set a three year budget to meet the £156 million of savings required between now and 2017.
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.
In the New Year, the city will lay out a three year strategic programme of reductions in funding in order to give some certainty to residents about how services will look. It will also give certainty to providers, partners and suppliers – helping us support local businesses through the changes and, in turn, support the local economy.
The council needs to save £45 million in 2014/15, £63 million in 2015/16 and £48 million in 2016/17.
Mayor Joe Anderson said: “We are in unchartered waters in terms of the level of reductions that we are facing. That means it is more important than ever that we take a longer term view and have a clear idea of what the will council will look like three years from now.
“I want us to be absolutely open and honest with people about the challenges that we face, because every single person is going to be affected and every service – and it will be every service – will face significant reductions. Some may be withdrawn altogether.
“Some of the changes will take time to implement, so it is important we start planning for them now. And by planning them, now we can stop the annual cycle of cuts which brings with it lots of uncertainty and fear.
“We have already had more than 6,000 people visiting our online budget simulator to look at the issues we face and suggesting where savings should be made. I would urge people to take the time to have a look, tell us their priorities and have their say, and that is why I am telling people about our plan now.
“But the stark reality is that it will mean fewer libraries and leisure centres. It will mean tough choices over social care services and it will mean transferring some services to other organisations.”
The city has also recently launched a 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.
Mayor Anderson added: “Council tax brings into the city £118 million per year but our adult social care bill alone is £174 million, so residents can see we fall well short of funding before we deliver parks or leisure centres and emptying bins.”
“Some people assume that because we are building schools and have money in reserves that we have a drawer full of cash which can use to plug the gap. The truth is that Government imposes all sorts of restrictions on the spending of different pots of money, which prevents us from doing this.
“What we are doing to offset to offset the cuts is finding new ways of bringing in income, such as buying and renting out the Cunard Building using invest to earn.
“And to offset the cuts in the public sector, we are using our own money to step in and ensure that businesses such as H2 Energy and BAC Mono move to the city to create jobs and growth.”
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 96 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, which will halve over the next three years as we pay bills such as legal claims and other committed future expenditure. Some of the reserves are held on behalf of other organisations, for example schools. 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 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.