The week after the budget meeting that made the headlines we thought it was high time we shared more data with you.
Liverpool City Council is funded in four main ways:
• Government funding — 60% of total
• Council Tax — 14% of total
• Business rates — 15% of total
• Other income — 11% 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.
When adjusted for inflation, Liverpool City Council has £436 million less to spend per year now than it did in 2010, which equates to a 63 percent cut in its overall budget.
Each year, alongside the Local Government Finance Settlement, the Government publishes figures showing the spending power available to each local authority.
These Core Spending Power figures (previously Revenue Spending Power) include the main general government grants together with income from council tax and retained business rates.
The Government’s own figures show Liverpool’s Spending Power has reduced by a cumulative 21.3% in 2019/20 compared to 2010/11. The average reduction for all English authorities over this period was 10.2%.
Had Liverpool’s Spending Power been cut by “only” the average 12.3% then it would be £77 million better off in 2019/20.
This year we still have £19 million to save and next year we forecast we need to save a further £25 million.
We have lost more than 2,500 staff since 2010 and also cut senior management salaries and axed bonuses.
Where does the money go (2019/20)
Total net budget: £434 million
- Adult Services and Health: £181 million
- Children’s Services: £126 million
- Community Services: £53 million
- Regeneration: £38 million
Council tax base
Liverpool has been amongst the worst affected councils by cuts because historically it has been more reliant upon government grant because of its relatively low council tax base.
Reductions in government funding cannot be mitigated by growth in council tax income to the extent that it can in many other authorities. Hence, the higher than average cut in spending power.
A total of 60% of dwellings in Liverpool are in the lowest council tax band A. The average across England is 24%.
A total of 77% of dwellings in Liverpool are in bands A or B. The average across England is 44%.
A total of 90% of dwellings in Liverpool are in the lowest 3 bands (A to C).
The average across England is 66%.
The council tax base is also reduced by the number of dwellings qualifying for discounts and exemptions. The main exemption is for student-only dwellings and the main discount is for council tax support.
Liverpool’s tax base is reduced by almost 40% due to the impact of discounts and exemptions. The corresponding average reduction across England is 20%.
If Liverpool’s tax base was comprised of the same proportion of dwellings in each council tax band as the national average; and if Liverpool had the same proportion of dwellings qualifying for discounts and exemptions as the national average, then in 2019/20 Liverpool would be able to generate an additional £102 million in council tax income.
Liverpool Income if Average Spending Power Cut and Average Council Tax Base
Additional income if average cut in Spending Power since 2010/11 — £74M
Additional income if average Council Tax Base — £102M
Total potential additional income in 2019/20 — £176M
Equates to net budget for Adult Social Care in 2019/20 — £181M
Do events and festivals make 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 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.
What is the council doing to help people most in need?
In 2018/19 we spent:
- £12 million on support to help prevent people becoming homeless and assisting rough sleepers
- Almost £3m this year on supporting people through the Citizens Support Scheme, compared with £2.7m in 2017/18.
- Spending on the council’s Discretionary Housing Payments scheme, which supports people who have been impacted by Universal Credit and are struggling to pay their rent, has risen by more than 12 per cent over the past year, to £3m.
- The council provides the most generous Council Tax relief programme in the Liverpool City Region, whereby low income families can claim up to a 91.5 per discount on their Council Tax. Around 41,600 working-age households benefit from this £3.5m scheme.
- The council’s Benefit Maximisation team has helped residents to claim more than £10m in benefits they were entitled to.
What are the other options?
It is a stark economic environment, so the options are limited.
We have done as much salami slicing as we can and setting an unbalanced budget is not an option as we have a legal duty to balance the books.
Liverpool has £16.3 million in general cash reserves, which equates to under 4% of our net budget. Using our available reserves to pay for our services would mean we would run out of cash in a couple of weeks. Any other funds held in reserves are being held on behalf of other organisations (such as schools) and the council is legally not allowed to touch them, or they are already allocated to a project.