Mayor Joe Anderson has written to Prime Minister David Cameron warning of the impact of the spending reductions being imposed on the city council, and urged the Government to think again.
In it, the Mayor says the figures are “stark” and warns that it will be ” impossible to make this level of savings without having a devastating impact on critical services and the lives of people and businesses of our City.”
Mayor Anderson says he accepts that the country is in a time of austerity but notes that independent analysis of the cuts shows that Liverpool’s reduction is over four times the national average at £252 per head.
He outlines the fact that the council is 80 percent dependent on government grant, with only 11 percent of income coming from council tax.
He adds: “I firmly believe that there is a clear disconnect between an agenda to stimulate growth through city deals and the differential impact of the distribution of public sector cuts on places and economies like Liverpool.”
Mayor Anderson also warns that the impact of the changes in welfare reform such as council tax support grant, and warns it will have a “significant detrimental impact on the economy of the city as there will be even less money in circulation than at present.”
He concludes: “I fear the worst in respect of our ability to continue to deliver services to vulnerable and desperate people in some of the most deprived communities, not just in Liverpool but the country. I ask you to reflect upon the calls for the Government to consider the fairness argument, in the light of the considerable weight of evidence, and review the formula before the desperate measures take effect and remove the things that make for a quality of life, the very things that complement and contribute towards a ‘big society’. No doubt your officials will tell you that we receive a larger funding element than others to deal with social deprivation, that maybe true but we are a City with the most deprivation and therefore need that support. In conclusion I believe that community cohesion is being seriously threatened by the lack of funding to our City and others, I believe that the so called summer of discontent will happen again if we do not address this issue. I hope therefore you listen to my plea and offer to discuss this with me at your earliest opportunity.”
A summit of large cities about the impact of the cuts is to be held in Liverpool, co-hosted by Mayor Anderson and Bishop of Liverpool, Right Reverend James Jones, on 18 January.
The full letter to the Prime Minister is below.
12 December 2012
Rt Hon David Cameron MP
Prime Minister
10 Downing Street
LONDON
SW1A 2AA
Dear Prime Minister
RE: LIVERPOOL CITY COUNCIL BUDGET REDUCTIONS
I am compelled to write to you to set out the difficulties that Liverpool City Council is facing as a result of spending reductions imposed by the coalition government’s financial settlement to local government.
The figures we face are stark. Over the last two years Liverpool has had to make £141 million of savings. Over the next four years we estimate that we have got to cut the budget by another £143 million, from a total spend of £480 million. In total, it means that we will have lost around 52% of our controllable income since 2010. It is impossible to make this level of savings without having a devastating impact on critical services and the lives of people and businesses of our City.
I accept that we are in a time of austerity and I have made it very clear publicly that everyone has to contribute, but it must be on an equal footing. What I find very difficult to accept is that whilst some local authorities are almost being dismantled because of the scale of the cuts they are required to make, there are others that are practically no worse off.
We have all seen the analysis of the figures relating to cuts per head of population. The Guardian’s recent report, which I have attached for reference, laid bare the disparity between certain local authorities. By no stretch of the imagination can those figures be touted on the basis of fair distribution. With the England average being at £61 per head, Liverpool’s reduction is over four times that amount at £252 per head. By way of further context, had Liverpool’s funding been reduced in line with the national average, we would have received £407.6m in government grants rather than the £369.4m (2012/13) – a difference of £38.2m. In real terms, this cumulates in a reduction from 2011/12 to 2016/17 of 52.1%
I firmly believe that there is a clear disconnect between an agenda to stimulate growth through city deals and the differential impact of the distribution of public sector cuts on places and economies like Liverpool.
I therefore thought it would be helpful to set out some context for you on this as it is a major issue and undoubtedly erodes the potential for growth that we both recognise in Liverpool and the wider city region.
- At the outset of the recession, Liverpool’s economy was around 36% dependent on the public sector
- The council’s funding has historically been dependent on national government – our budget is made up of 80% government grant, 11% from council tax receipts and 9% from income/generated revenue
- The changes in allocations to local government as part of the national public sector austerity measures have a disproportionate impact because of the formula used to distribute the amount of funding nationally
- Successive governments have failed to tackle the inherent flaws in the formula and distribution mechanism – especially around population, structural type of authority and deprivation factors.
In addition, we anticipate the impact of the changes in welfare reform to have a significant detrimental impact on the economy of the city as there will be even less money in circulation than at present, thus compounding the effects of the above. From April, Council Tax support grant will transfer to local government at an underfunded amount. The headline cut of 10% is difficult enough for a rapidly contracting organisation to deal with. This has been made more difficult by imposing restrictions on the way in which local support schemes may be set up, forcing any benefit cuts on to the working age population of each authority. This alone would have meant individual cuts as high as 20% for some benefit claimants or alternatively the Council would have to find the cuts from its own budgets which would mean over £6m for Liverpool.
The Bishop of Liverpool recently addressed the Lords where he found it necessary to question the unfairness of the distribution of funding and called upon the Government to question its own assurance that the financial settlement is fair. I have worked with the Bishop to put in place arrangements for an event to be held in January in Liverpool with political representatives and faith leaders from Newcastle, Bristol, Sheffield and Birmingham, four other cities which are feeling the worst effects of the cuts, to outline the devastating impact they are having on our communities and particularly to highlight the unfairness of the Government’s actions in this regard.
I fear the worst in respect of our ability to continue to deliver services to vulnerable and desperate people in some of the most deprived communities, not just in Liverpool but the country. I ask you to reflect upon the calls for the Government to consider the fairness argument, in the light of the considerable weight of evidence, and review the formula before the desperate measures take effect and remove the things that make for a quality of life, the very things that complement and contribute towards a ‘big society’. No doubt your officials will tell you that we receive a larger funding element than others to deal with social deprivation, that maybe true but we are a City with the most deprivation and therefore need that support.
In conclusion I believe that community cohesion is being seriously threatened by the lack of funding to our City and others, I believe that the so called summer of discontent will happen again if we do not address this issue. I hope therefore you listen to my plea and offer to discuss this with me at your earliest opportunity.
Best Wishes
Yours sincerely
JOE ANDERSON
Mayor of Liverpool
