Liverpool City Council Funding

Tuesday 29th October 2019 Westminster Hall

11:00

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

I beg to move,

That this House has considered the funding of Liverpool City Council.

It is a pleasure to serve under your chairmanship, Sir George. Liverpool has borne the brunt of a decade of austerity. Massive cuts in Government funding have hit the council hard, combined with benefit changes that have hit the poorest and most vulnerable hardest. I pay tribute to all those who work across public services in Liverpool, who do their utmost to deliver the best services. Last Friday I visited the fantastic Mab Lane Primary School in my constituency, which serves a community with high levels of social and economic need. The headteacher, Laura Morgan, provides truly inspirational leadership in a school that is making a real difference to the life chances of children, and therefore to the local community.

Liverpool City Council tells me that, when adjusted for inflation, it has £436 million less to spend each year than it did in 2010, which equates to an overall budget cut of 63%. As a result, Mayor Joe Anderson has warned that the council faces its

“worst financial crisis since the Second World War”,

with a £57 million budget gap in the coming year.

In those bleak circumstances, the council held an emergency budget meeting last month, where the finance director, Mel Creighton, publicly addressed the chamber for the first time. She said:

“We have gone as far as we can go—the next decisions we make will be very difficult ones.”

The city has exhausted its reserves; it has just £16 million remaining. If those reserves were used for day-to-day services, they would last about a fortnight. After that, there would be nothing left.

[Luciana Berger (Liverpool, Wavertree) (LD)]

I commend the hon. Gentleman for securing the debate on behalf of the city and people of Liverpool. Does he agree that that council meeting was an extraordinary example of people from across the city of all political persuasions coming together to back a motion that went to the council that said they wanted an urgent meeting with Government Ministers to set out the situation? We have that opportunity today to say that, party politics aside, Liverpool will be unable to continue in the current vein if something is not done urgently to address the serious situation.

[Stephen Twigg]

The hon. Lady’s intervention precisely anticipates my next paragraph.

At that unprecedented meeting, members of the Labour, Liberal Democrat, Green and Liberal parties agreed unanimously on a call for urgent action from the Treasury. Liverpool MPs, led by my hon. Friend the Member for Garston and Halewood (Maria Eagle), have echoed the call for an urgent meeting with the Secretary of State. To echo the hon. Member for Liverpool, Wavertree (Luciana Berger), I ask the Minister whether the Government will meet Liverpool’s Mayor, MPs and councillors as a matter of urgency to look at ways in which the Government can help to address Liverpool’s perilous financial situation.

There is an inherent unfairness in the way that local government funding is allocated. The Government use core spending power as a measure. Their figures show that had Liverpool been subjected to only the average reduction in support for all authorities, it would be £77 million a year better off. Instead, since 2010 there has been a dramatic reduction in Liverpool City Council’s spending power while the spending power of other authorities has increased. For example, Surrey County Council’s spending power has increased by £65 per household in the same period.

In authorities such as Liverpool—and next-door Knowsley, Sir George—with a high level of deprivation, a large proportion of properties are typically in the lower council tax bands, for which higher Government grants have compensated. Since 2010, however, support from the Government has been reduced as they have sought to offset austerity by allowing local authorities to raise more taxation locally. The difficulty is that 60% of dwellings in Liverpool are in the lowest council tax band, whereas the national figure is about a quarter. Liverpool’s council tax base is further reduced by the number of dwellings that qualify for discounts and exemptions.

If Liverpool’s tax base were comprised of the same proportion of households in each council tax band and the same proportion of households that qualify for discounts and exemptions as the national average, the city council estimates that it would generate more than £100 million extra in council tax every year. Surely we need to address that issue of fairness. Will the Government seriously consider the Mayor of Liverpool’s proposal for a royal commission on local government funding to ensure that a fair funding formula can be adopted across the country?

Despite all that, the council has managed to continue to prioritise services for the most vulnerable in our community. In the last year it has spent £12 million on support to help prevent people becoming homeless and on assisting rough sleepers. It has spent almost £3 million on the citizens support scheme that it set up to help residents in short-term crisis to meet their needs for food and other essential items. That has provided a lifeline for some of the city’s most vulnerable residents after the abolition of the discretionary social fund. The mayoral hardship fund continues to provide vital support for some of the city’s most vulnerable people. Spending on discretionary housing payments, which support people struggling to pay their rent, has gone up by 12%.

I pay tribute to Mayor Joe Anderson and councillors from all parties for taking action to protect the most vulnerable families who have been left struggling and worrying about how they will pay for essentials. The support that the council has been able to provide stands between many families and destitution.

I also thank the vibrant voluntary and community sectors, including the Merseyside Law Centre, formerly Merseyside Welfare Rights; St Andrew’s Community Network, which is based in the constituency of my hon. Friend the Member for Liverpool, Walton (Dan Carden); and the Alt Valley Community Trust. I volunteer monthly at the north Liverpool food bank at St John’s church in Tuebrook, so I see the great need in our communities and the fantastic role that the voluntary and community sectors play, alongside the city council, in seeking to protect some of the most vulnerable.

[Luciana Berger]

The hon. Gentleman is making an impassioned case, for which I thank him. Further to his important acknowledgement of the contribution that voluntary and charitable organisations make, I particularly commend the work of Liverpool Charity and Voluntary Services, without which many small organisations would not have been able to pursue their ambitions. At a time of decreasing funds, LCVS has gone above and beyond to support many small organisations to have the infrastructure, resources, tools and expertise to deliver vital local services.

[Stephen Twigg]

The hon. Lady is absolutely right to put on the record the amazing contribution that LCVS makes, as do similar councils in other parts of the country. In the 12 years that I have been in Liverpool, I have been struck by the strong sense of community and the sorts of organisations that come out of some of the most socially and economically deprived communities, some of which I mentioned. I can imagine how much worse the impact of those cuts in Government support would have been if it were not for the great work done by LCVS and some of the other voluntary organisations to which I referred.

The reality is that the council faces a near-impossible challenge: when services are needed most, it has fewer resources with which to respond. The Association of Directors of Children’s Services calculates that the number of statutory responsibilities for local authorities in children’s services has gone up by something like 50% since 2011. We need an urgent review of the financing of statutory services to ensure that they are adequately resourced, because otherwise there is a real risk that we will fail the most vulnerable people again.

The city council is pioneering new technologies to combat climate change. Liverpool has set the bold aim of becoming the world’s first climate-positive city by the end of next year, which would mean the city would remove more carbon dioxide from the atmosphere than it emits each year. The council is working alongside the Poseidon Foundation to help offset its carbon emissions by incorporating blockchain technology into the day-to-day operations of the city council. Reflecting the challenges of climate change, the council recently declared a climate emergency. It is crucial that the Government work with the council and local community to ensure that the funding and support is there, so that we can respond fully to the scale of the climate emergency.

The city council has also been innovative and ambitious in seeking to deal with the desperate financial situation that it faces—for example, it has been pioneering in its Invest to Earn strategy, generating income through investments in the private sector that can then be ploughed back into support for local services. The council has relied heavily on the Public Works Loan Board for low-interest loans to invest in the purchase of assets that can bring in new revenue streams and grow the local economy. It is very concerning that the Treasury has now announced an increase of an entire percentage point in the interest rate for the Public Works Loan Board. The city council is doing all it can to mitigate the impact of austerity, but the interest rate increase will make that task more difficult.

Decisions made by Governments since 2010 have resulted in poverty becoming more entrenched for many of my constituents. We have now had the latest English indices of multiple deprivation, and Liverpool ranks third. Almost a quarter of the population of Liverpool live in income-deprived households, and around a third of children are growing up in poverty. The high level of need, which results in demand for services, cannot be met solely by a council tax base that, as I have said, is low. We desperately need a fairer funding deal.

[Dan Carden (Liverpool, Walton) (Lab)]

Does my hon. Friend agree that the imposition of universal credit, which is very much a political decision by the Government, has only added to the woes of the most vulnerable people in our city? I pay tribute to him, and to the hon. Member for Liverpool, Wavertree (Luciana Berger). We could be heading into a general election very soon, and they have been part of the Merseyside community for the past 10 years. I pay tribute to them for all the work they have done in this place to raise the issues of poverty and the most vulnerable people.

[Stephen Twigg]

I thank my hon. Friend and neighbour for his kind words, and I echo his comments about our friend, the hon. Member for Liverpool, Wavertree. He is absolutely right about the impact of universal credit and, before that, other changes—for example, the reductions in disability benefits and the introduction of the bedroom tax. That combination of factors has been significant in contributing to the challenges that the city council faces.

I am proud that Liverpool City Council has managed to keep delivering vital services and has done its best to protect some of the most vulnerable people, but the city now faces a budget gap that the council estimates to be £57 million, and it has just £16 million left in the reserves. Something surely has to give. The city council, the Members of Parliament and the entire city are united in saying to the Government that we want a fairer funding settlement that genuinely reflects the real levels of need in the local community. My concern is that if this is not put in place, we risk losing crucial services that our most vulnerable constituents rely on every day.

I hope that the Minister can give us some hope that there is light at the end of the tunnel. I particularly hope that he can address the two specific requests for a meeting and for the Government to consider a royal commission on local government funding, because many of the issues faced by my constituents in Liverpool are faced by other communities across Merseyside, across the north-west and, indeed, across the country.

11:14

[The Minister for the Northern Powerhouse and Local Growth (Jake Berry)]

It is a pleasure to appear under your chairmanship, not for the first time, Sir George. With a general election looming, and given that there are marginal seats across north-west England, it might be the last time for a while.

I am proud to have been born in Aigburth, to have attended Liverpool College, and to have spent my entire life before the age of 18 living in the great city of Liverpool, so I was really keen for the opportunity to respond to the debate. I congratulate the hon. Gentleman on securing this debate, which is important not just for his constituents, but for north-west England. As a fellow north-west MP, I think a thriving Liverpool city region is about creating a thriving northern powerhouse.

I want to focus briefly on facts, because the hon. Gentleman talked a lot about the role Liverpool has played in cutting the deficit since the economic crash of 2007-08. I do not want to get into the politics of what might or might not have caused the crash, but it is absolutely clear that in an environment of reducing budgets, local government across our United Kingdom—but particularly in England, for the purposes of this debate—has played its part. However, the core spending power in Liverpool has increased every year since 2015; the increase this year will be some £9.2 million. I hope that reflects the fact that we are moving from a decade or thereabouts of recovery to one of renewal, in which local authorities must play their part, as an economic partner of Government, in driving the wider economy.

Wider investment in the Liverpool city region is so important to the hon. Gentleman’s constituents, and the constituents of other hon. Members; I am sure they would want me to focus briefly on that, before I address the two questions raised in the debate. I was really pleased that £172 million from the transforming cities fund went to the Liverpool city region. Having spent a considerable period of my life going around south Liverpool on a bike, and given that we are looking to address the climate emergency, which Liverpool City Council has been very forward-thinking in bringing to the fore, I was pleased to hear that £16 million of the fund will be invested in walking and cycling infrastructure in the city.

Another £460 million will be invested in the Merseyrail system—the Liverpool tube system, as it was described to me by a friend from London who recently visited the city. I went to school on those trains, sometimes via a slightly roundabout route. For my first job, I used to travel on the Merseyrail from Cressington station all the way to Moorfields. The trains were pretty terrible 20 years ago—or even 35 years ago, when I used to get them. I am very pleased that the money, which comes from a partnership between the council, the Liverpool city region and the Government, will be invested in the transport infrastructure.

Those of us who have spent long periods of our life sat on the Runcorn bridge will agree that the £1 billion invested in the new Mersey Gateway—£600 million was direct Government funding—shows the Government’s ambitions for the region. Many of those ambitions have been focused through the Liverpool city region devolution deal; the core funding for the devolution deal is some £900 million over the initial period. More importantly, it is about taking power, money and influence away from Whitehall and returning it to the great city of Liverpool. Those of us who grew up there in the 1980s know that Liverpool is rejuvenated, and has undergone a renaissance since the very dark days of deprivation, industrial decline and political chaos. The devolution deal is a really important step in ensuring that the renaissance continues.

I do not have to tell any MPs here who represent Merseyside seats, including you, Sir George, that Liverpool is the only city ever to have had its own Department in Whitehall. At one point, Liverpool contributed more to the Exchequer than the entire City of London. Arguably, Liverpool is the city that invented globalisation, and it certainly has always had the mercantile economy at its heart. Anything we can do to drive jobs and growth back into the city is something that we should work on together.

[Stephen Twigg]

I am a strong supporter of the city region devolution. The deal the Minister describes is welcome. However, the strong sense in Liverpool is that what the Government have given the city region with one hand does not make up for what they had taken away with the other, particularly from some of our most deprived communities. Does he recognise that concern?

[Jake Berry]

I will come on to address the hon. Gentleman’s specific points, but it is worth focusing on what happened in Liverpool. Across this House, we want to be optimistic for the people we represent, and there is real optimism in Liverpool. There are challenges, and have been for as long as I have known the city, which is my entire life, but on many occasions, sometimes in this building, people from across public life want to talk down to Liverpool. I want this debate to be an opportunity to celebrate everything that is fantastic about that city.

[Luciana Berger]

I share with my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) and the Minister their categorisation of Liverpool as that vibrant, optimistic and positive city. Over the course of what will soon be a decade, however, the city has done so much in spite of the Government, and not because of it. My hon. Friend laid out many things that have happened, and I have a whole list in front of me of cuts, including to our fire service, the police service, the health grant formula—that is the current reality—or the early intervention grant to give every child born in Liverpool the best chance of the best start in life. Despite the cumulative impact of all those things, Liverpool has soldiered on—but that does not take away from the reality of what the city is contending with after nearly 10 years of cuts.

[Jake Berry]

It will come as no surprise to the hon. Lady that I disagree with her. Lots of what I am talking about—the £900 million devolution deal, the £1 billion for the Gateway crossing, the £330 million from the local growth fund, and the £140 million upgrade of Lime Street station, which I am pleased about, because it was awful when I was growing up, and it is a fantastic building now—is a partnership. I hope that this debate can be about what Liverpool, the Government, the mayors and the metro Mayor can do together to drive the city. I know that that is the spirit in which the hon. Lady would wish me to respond to the debate.

Liverpool City Council has some challenges with funding, as well as other issues. It has £100 million of uncollected council tax arrears, which it should do something about, because that is very high from a national perspective. Its chief executive’s remuneration package is £461,823, which is absurd and not something that should be supported by the council, although it is, because it will have been voted on by the council. In fact, the council has 57 employees across Merseyside who earn more than £100,000 each. The age of austerity might be writ large over many parts of the council, but it has not yet reached the chief executive’s remuneration package, and there are things that the council could do, such as recover some of the £100 million of council tax arrears.

The partnership approach, however, which I hope Members across the House support, is part of the story of renaissance in Liverpool. I agree with the spokesman for Liverpool City Council who, earlier this year, said that Liverpool is undergoing a regeneration boom, with £14 billion of development schemes being delivered or in the pipeline. I pay tribute to the work of the city council in transforming the city, despite having maybe played its part in the decade of recovery from the global economic crash. Despite reductions in the amount of money the city has to spend, it is thriving and booming. People do not need to take my word for it, because anyone can visit the city—in fact, I recommend that they do. And we have not even talked about having the best football team in Europe, although that might be controversial; I do not know whether any Evertonians are present.

Why does all that matter? It matters because the Government are serious about delivering a northern powerhouse—a growing northern economy for all our constituents, including mine and yours, Sir George. Liverpool must be at the heart of that regeneration, and of the renewal of the north of England. That is why I am so pleased that the Prime Minister recently set out his agenda to level up all the powers of the metro Mayors—to ensure that Steve Rotheram has the same powers as Andy Burnham—so that we can drive Liverpool’s economy. I fully support that, and I hope and believe that Steve Rotheram, who has had discussions with me and with the Prime Minister about that agenda, will come out in support of it.

That is also why we have levelled up education funding. The hon. Member for Liverpool, West Derby, started the debate by talking about a school in his constituency, and I echo his tribute to all those working in our public services in Liverpool, Merseyside, the wider north-west and our entire country. That is why we are increasing funding for the NHS and the number of police on our streets. It is the poorest in our society, wherever they may be in England, who rely most heavily on the NHS and public services. That is why I applaud the Prime Minister’s ambition to level up.

[Stephen Twigg]

I welcome the additional powers for the city region Mayor, and I pay tribute to Steve Rotheram for his work. I absolutely echo what the Minister said about the renaissance in the city centre, but I represent suburban east Liverpool, and it does not always feel that way in some of the communities that I represent. They are much more reliant on the council services that I focused on in my speech, so I am absolutely with him on the importance of the city region and investment in it, but we need to ensure that the basic services get their funding as well.

[Jake Berry]

I accept that. In my penultimate point, I will address the two points raised by the hon. Gentleman about the real purposes of the debate. First, on an urgent meeting, I am not able to promise that the Secretary of State will meet the hon. Gentleman and his colleagues urgently. However, I am more than happy to meet them myself, which is a promise that I can make. I am sure that he will be in touch, or my private office will be in touch—subject to the limited opportunity that might be available if the election motion passes today. If it is at all possible, I will certainly do that. I have always taken great pride in being from Liverpool. In fact, my grandparents lived in the hon. Gentleman’s constituency, in a place called Hayman’s Green, just behind the village centre in West Derby, so I know his constituency extremely well.

Finally, on the royal commission, the future of local government funding is something that would of course be set out in a Budget, but it appears that we will not have a Budget before 6 November. I suggest that the hon. Member for Liverpool, West Derby, keeps a close eye on what might be in a Budget. However, I reassure him on the point about the proportion of council tax properties in different bands. Since 2016-17, distribution of resources in the central grant system has taken into account the banding of council tax and business rates payers in the city. We believe that we have addressed that, which historically has been a major problem for cities such as Liverpool.

In conclusion, I hope that the hon. Gentleman, like me, occasionally gets the opportunity to visit the Pier Head. When I do, I look at the “Three Graces” buildings, including the Royal Liver building and the Cunard building, and all the fantastic architecture, and I am always struck by the fact that those buildings show their best face to the world. In fact, the back of the buildings, facing Saint Nick’s church, are relatively plain. Their best face looks out to sea, and that is what Liverpool has always done and will continue to do. After we leave the European Union, a global Britain can be led once again by a global Liverpool.

[Sir George Howarth (in the Chair)]

Before I bring the proceedings to a conclusion, I use the privilege of the Chair to thank the hon. Member for Liverpool, West Derby (Stephen Twigg) and the hon. Member for Liverpool, Wavertree (Luciana Berger) for the service that they have given. I also wish them well in the future, whichever direction that may take them.

Question put and agreed to.

11:28

Sitting suspended.