The view from Liverpool on the end of austerity
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It is evident walking around the centre of Liverpool today that it is enjoying a renaissance. Urban regeneration projects, arguably triggered by its UNESCO world heritage status, have revitalised a city that was tired and run down just ten years ago. But appearances can be deceptive. In that same decade, austerity cuts have hit Liverpool residents harder than anywhere else in the country.
According to the Centre for Cities recent Cities Outlook report, Liverpool has strained under a £441m reduction in spending between 2009-10 and 2017-18. That equates to an £816 cut for every resident, more than twice the average of other cities and the largest per capita reduction of any city in Britain. That’s two-thirds of Liverpool City Council’s budget, according to its mayor, Joe Anderson.
He is gravely concerned that when the new fair funding formula is unleashed, it will hit deprived families in Liverpool even harder, as it looks set to give less weight to those in more deprived urban areas.
Speaking at a Centre for Cities discussion on the impact of austerity on Thursday, he told the audience that it was important we reflect on the differences between England’s second-tier cities.
“There are 80,000 more people living in Liverpool than Bristol, but they get more in council tax than we do,” he said. “We get hit by an obscene double whammy, as we need the highest levels of support for families.”
When Mr Anderson took over in 2010, Liverpool City Council used to spend £220m on adult social care. Today, he claims it’s £172m and that he has to try to get it down to £160m. That’s with reserves of £16m, which is less than 4% of its net budget.
Two years ago, Mr Anderson called for a royal commission to come up with a new way of financing local public services, and he reiterated that call again this week, saying the issue needs to be looked at by “someone who doesn’t have an axe to grind”.
Mr Anderson blames not just the government, but the media for a “lack of understanding of the complexities of the funding model and what it means to individuals and cities”.
The government’s proposed new foundation formula for spending would see a greater proportion of the pot diverted to more rural locations, much to the ire of Mr Anderson, whose city has pockets of deprivation that are still untouched by its urban revival.
Alan Harding, chief economic adviser for Greater Manchester CA, told the event in Liverpool last week that local government needed to see an end to the “constant flip-flopping between the Tories and Labour… one will cut from cities and the other will put back”. ”We are currently scrapping for crumbs on the table,” he added.
Mr Harding pointed to the recent UK2070 commission report, and how it likened the scale of inequalities the UK faces now to that of Germany after its reunification.
By 2014, around €1.5tr in German public money had been made available for investment in regenerating and renewing cities, regions and infrastructure, supported by a spatial framework to tackle the inherited inequalities between the poorer East and wealthier West of the country.
By contrast, the report claimed that to tackle its own regional inequalities, the UK had “relied on short term, reactive, underfunded project bidding processes, with a perverse ‘policy’ environment which reinforces past areas of growth, rather than unlocking new areas with future potential”.
Plans for a new funding formula are currently being scrutinised as part of an inquiry by the Commons housing, communities and local government committee into local government finance.
For Mr Harding, the constitutional solution to the crisis of inequality in the UK is more devolution to sub national authorities.
“How we get there is the debate we need to have. We are trying to do that in Manchester,” he said.
Liverpool MP Dame Louise Elman also believes that England’s northern cities would benefit from a “very strong form of devolution” to counter the influence of London, particularly when it comes to infrastructure funding.
“The bigger London gets, the more that the north gets left behind,” she said. “In London, transport spending is two and a half times more per head than in the north. Don’t be fooled by the talk of scrapping HS2 – that’s about them diverting more money to London.”
She points to the way that local authorities and LEPs came together “of their own accord” last year to form ‘Transport for the North’, the UK’s first statutory sub-national transport body, as evidence of the need for devolution.
Both Ms Elman and Mr Anderson are convinced that the government has kicked the long-anticipated spending review far into the long grass, with Mr Anderson, who recently posed the question to a treasury minister, saying it will now take place in the Spring “when we will probably have a new chancellor, whoever that is”.
Whenever the spending review does come, you can be sure of a backlash from the leaders of Liverpool and other northern cities if the formula with which future funding is distributed leaves them feeling even more left behind.
Jessica Hill, senior reporter