Liverpool City Council Funding

Luciana Berger Excerpts

Tuesday 29th October 2019 Westminster Hall

[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.

--- Later in debate ---

[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.