Liverpool Town Hall

Final set of budget options announced

Liverpool City Council has announced the final tranche of budget options for 2013-14.

The council needs to save £32 million in 2013/14 on top of the £141 million of cuts over the last two years.

Overall the council is having to save £290 million from 2011-17 – which includes £46 million in 2014/15, £35 million in 2015/16 and £36m in 2016/17.

The options considered and supported by the Budget Working Group comprising the Mayor, the Liberal Democrats and the Liberal Party include:

• A review of libraries and the introduction of a ‘hub and spoke’ model from 2014/15. This follows the opening of the brand new Central Library which the council has committed to running at a cost of almost £2 million per year (a PFI deal was signed in 2009). Consultation will be held over having a smaller network of buildings and some services may be delivered by other organisations from 2014/15. The service will also place more of an emphasis on digital access, with members available to download books online. This option will save £1 million per year (from 2014/15)

Reviewing the operations at Kirkby and Allerton municipal golf courses which are both running at a loss, saving up to £300,000

Review of the Integrated Youth and Play Service with the possibility of transferring services to the voluntary and community sector, saving potentially £1.2 million over three years

Withdrawal of part-funding for sheltered housing wardens, with Registered Social Landlords asked to fund the shortfall, which could save £1 million

• Introduction of charges for community alarms at sheltered housing, saving £449,000 per year

Reviewing homeless hostels at Geneva Road and Aigburth Drive in order to save £150,000 per year

Selling four nurseries which are heavily subsidised by the council to save £800,000 per year

Ceasing the council’s role in the Truancy Watch service from 2014/15 to save £132,000

The decisions in this tranche total £5.7 million, with some of the most difficult changes only taking effect from 2014/15 to give time for consultation; to ensure they are implemented in the fairest possible way, and to give partners/providers sufficient time to adjust.

Around 400 staff will be affected by service reviews or proposed transfer to external organisations. The council will do all it can to facilitate redeployment, and discretionary compensation will be offered.

The Council has yet to decide between increasing council tax or accepting the Government’s offer of a grant to freeze council tax again. The council tax freeze grant is £1.6m but is not available beyond next financial year. The council has the potential to raise council tax by 1.8 percent which would generate around £2m income into our base budget in future years.

Mayor Joe Anderson said: “This has been a horrendous process in which we have had to make some extremely difficult and hard choices in order to balance the books for the next financial year, but also to prepare for the following year.

“In previous years we have been able to make many of the savings by reducing back office functions, and halving the senior management team.

“We are now at the stage where those options have gone and we are having to prioritise one front line service over another.

“It is really, really tough to be contemplating reducing or withdrawing good services which are a lifeline for people.

“Some of the cuts we are announcing won’t be implemented for another year to give us time to speak to people about what we are proposing, and give us time to make sure we are doing all we can to minimize the impact.

“I completely understand that some people will be extremely unhappy at what is being proposed. They have every right to be angry, because I am as well.

“The simple fact is that we get 80 percent of our funding from the government, and the savage cut in our grant means we are the hardest hit city in the country.

VIDEO: Mayor Anderson on the budget

Deputy Mayor and Cabinet member for Finance, Councillor Paul Brant, said: “Our government grant is being cut by more than 50 percent over the lifetime of this parliament. There is simply no way that we can possibly make this level of savings without impacting on frontline services.

“We are doing our very best to mitigate the impact and do it as fairly and equitably as possible, but it is simply wrong that people in the poorest city in the country should have to shoulder cuts amounting to £252 per household when the national average is £60.”

Decisions already taken in previous budget tranches include the withdrawal of school uniform grants and the removal of a subsidy for a shopping service run by Age Concern.

Consultation will now start on the options and they will be considered by the Mayoral Select Committee on Tuesday 12 February and the Cabinet on Friday 22 February. You can read the agenda for the Select Committee meeting, and the Equality Impact Assessments for each option here

View all the tranche three budget options here: 

http://councillors.liverpool.gov.uk/documents/s115318/Appendix%201%20-%20Tranche%203%20Budget%20Savings%20Options.pdf

More information about the budget can be found at www.liverpool.gov.uk/budget and people can get in touch by emailing budget@liverpool.gov.uk or writing to Budget, Chief Executive’s Office, Municipal Buildings, Dale Street, Liverpool, L2 2DH.

The council is due to set its budget on Wednesday 6 March 2013.

BUDGET FACTS

Savings needed year by year:

2011-12: £91.4 million (delivered)

2012-13: £50 million (on target)

2013-14: £32 million

2014:-15: £46 million

2015-16: £35 million

2016-17: £36 million

TOTAL: £290.4 million

DID YOU KNOW?

80 percent of the council’s funding comes from central government

Only 11 percent of the budget is raised through council tax

Controllable government grants to the council are being cut by 52 percent over this parliament

Substantial sums are still being spent on children’s and adult services and accounts for more than half of net council spending

MYTH-BUSTER/FREQUENTLY ASKED QUESTIONS 

I’ve read that Liverpool City Council is sitting on millions of pounds in reserves, why can’t you dip into them?

Reserves can be compared to how you manage your own income. You will have bills you pay every month, but you also have things you are saving for in the future – an extension, a new car or debts that need to be settled. We also know we have bills coming, and put money away to pay for these. Sometimes the bills take years to come to fruition, for example when there is a court case about a particular claim – it can be settled quickly and we can’t afford to be caught with no money in the bank to pay for it.

The other big thing is that we spend £1.4 billion a year, so our bills are big and the bills that we know are coming in will also be big so the “reserves” are actually not that huge in the context of how much we spend. Our reserves, which are forecast to be £90 million at the end of the financial year, are just 6.4 percent of our overall budget.

As we are responsible for public money we can’t go overdrawn or bust, so we have some money that we set aside which we review monthly, which is there as a safeguard for unforeseen debts and circumstances. This is our General Fund Balance of £24 million. If we didn’t set aside this money, we’d be exposing services to risk as we’d have no money to pay for unforeseen situations.

Not all of the reserves are ours to spend. For instance, £10 million is money on behalf of schools for insurance claims, and a dedicated schools grant that we can’t touch.

There has been a lot said about us using our reserves to keep services running, rather than making cuts. We have to make £148 million of cuts over the next four years, so our reserves aren’t enough anyway. What’s more, the government’s auditors wouldn’t let us spend reserves in this way. We need to be able to cover our monthly bills with our monthly income on an ongoing basis, and using reserves would be a one off saving.

What we have done though is use reserves to delay some cuts being made to give everyone a chance to get used to the effects and make them less painful. For example, with the government’s cut in council tax benefit, we are using £1.4m of reserves to lessen the cut to benefits claimants to 8.5 percent, instead of passing on the whole 17.5 percent cut.

Your spending power is only being reduced by 1.7 percent in 2013/14, isn’t it?

The Government has already admitted that they have double counted the council tax support and related council tax income figures in the spending power calculations. It also seems that changes to Early Intervention Grant, winter pressures funding and backdated business rate appeals are also understated or omitted. This means that the actual cut in spending power is often more than double the figures announced and in Liverpool’s case it is a reduction of 3.9 percent, not 1.7 percent. The reality that lies behind the figures is that between 2010/11 and 2014/15 Liverpool faces a reduction in spending power of £252 per person – more than any other city in the country.

Why are you considering increasing council tax and turning down the Government grant?

The grant from Government is only for one year and would mean the council would have to make further savings in future years.

Raising council by 1.8 percent will deliver an additional £2 million for our base budget in coming years.

We would also use £400,000 in 2013/14 for a hardship fund which the newly created Mayor’s Poverty Action Group will administer.

The increase equates to an additional charge of £15.70 for the majority of households (52 percent) who live in Band A properties.

Why are you spending £50 million on Central Library at a time of budget cuts?

The PFI contract for Central Library was signed in 2009, before the austerity measures began. It is not money we have committed upfront, but is repaid in the same way as a mortgage over the next 30 years.

Can’t you do more to cut out waste and bureaucracy?

We have already done an enormous amount to protect front line services. Most of the savings over the last two years have come from the back office and by losing more than 1,500 staff. Our senior management team has been halved, salaries have been slashed and we have done away with bonuses, saving a total of £6 million annually.

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