When Labour won control of Liverpool council in May, we knew the finances needed to be put in order. We inherited children and adult care budgets which were overspending by £11 million, and we knew that impending cuts would reduce our income.
Acting swiftly to remove waste and cut costs, we started at the very top of the council and in the back office. Senior managers were cut from 91 to 43, saving £4.5 million, while legal and finance were trimmed by another £4.5 million. Agency staff were reduced by 60 and the senior salary bonus payments were axed. Vacancy management and voluntary severance packages have led to savings of £16 million. While not painless, this freed up £30 million to bridge the budget gap for next year.
We knew the government’s cuts would be severe. However, they were much worse than we had feared. Despite their own figures showing that Liverpool had the greatest need in the country, the government imposed the maximum cut in our grant. This followed the axing of our £350 million Building Schools for the Future programme, and the city’s share of the £6 billion Housing Market Renewal Initiative. Even the local Liberal Democrats publicly condemned the unfair way in which Liverpool had been treated. The level of the frontloaded spending cuts left the council with a £91 million budget gap for next year and a further gap of £50 million for the following year. This is against the city’s controllable expenditure of £400 million.
The unprecedented scale of the problem led to the Labour group making an offer to all of the opposition parties on the council to join with us in making a joint budget, rather than the normal partisan process. The Liberal Democrats said yes, and the other parties subsequently also joined. The offer was not without political risk for the Labour party. There could have been leaks, staged disputes and media grandstanding. However, to date the process has been remarkably smooth. Indeed, the joint group lobbied government to reduce the effect of the cuts and jointly spoke to government during the consultation period. The cross-party working has led to access to some ministers, which would not have occurred otherwise. However, we wait to see if there is any easing of the settlement. The local media has been very supportive of the ‘new politics’ approach of putting the city’s interest above narrow party political interest.
All of the parties have expressed an interest in continuing the process after the budget is set in March. In many ways the delivery of the budget and preparing for next year’s further cuts will be even harder than this year. It remains to be seen if the joint working survives but, whatever happens, Liverpool has once again shown it is leading the way in radical ideas and new ways of doing things.
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Blackpool Labour leader Simon Blackburn explaining how the finance settlement, beyond the current cuts, shows that the long-term situation for Labour-voting areas is grim
Anna Turley, deputy director of the New Local Government Network, on the LGA Labour conference and how winning locally can prepare Labour for power nationally
Patrick Diamond on how Labour councils must oppose the cuts but seize the oportunities presented by the localism drive
Lambeth leader Steve Reed on Labour leading the way against the unfairness of ConDem cuts
Dave Sparks, LGA Labour leader, correcting some of the myths peddled by Pickles