Calls for Osborne to ‘bring councils back from the brink’

On the eve of the Chancellor’s budget speech, MPs representing some of the UK’s most impoverished councils gathered in Parliament to call on George Osborne to use his Budget speech to spread any benefits from an upturn in the economy beyond those areas in the South East, whose local economies are already improving.

The group of SIGOMA MPs*, all representing local authorities outside the prosperous South East, have joined together to demand an immediate stop to further cuts in their councils’ budgets, which have seen some services in many boroughs stripped to their bare essentials and the most vulnerable and poorest put under increased pressure to make ends meet.

During the Chancellor’s almost four years in office many SIGOMA councils have seen significant and annual cuts to their budgets, with some councils losing over 25% of funding. The burden of the cuts has been specifically targeted to those with the highest levels of spend without recognising that that spend relates directly to the areas with the greatest levels of need and poverty.

The divide between councils representing prosperous areas and those with less well-off economies has also widened further as the Government has allowed councils to keep more of their business rates. Meaning those prosperous authorities receive yet more funding as business rates increase on the back of the economic upturn, but those with more struggling economies are left further behind.

SIGOMA councils are calling for a full evaluation of the total impact of the funding cuts since 2010 and seek tore-establish the link between the costs of services and the funding Central Government provides to run them. They argue that revenue cuts since 2010, and a greater level of top slicing of the Revenue Support Grant has left many SIGOMA councils desolate in comparison to many South East authorities which have borne little of the brunt of the funding cuts.

I have made a number of contributions recent regarding local government finance and Liverpool. On March 5th I asked the Prime Minster:

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): First, the Government told northern councillors to stop doffing their caps in the hopes of a handout. Then, the High Court ruled that Government cuts in European funding for Liverpool and Sheffield were illegal. What does all this say about the Government?


The Prime Minister: Of course, Liverpool—the city that the hon. Lady represents—has huge funding needs, and I believe that the funding it gets reflects those needs. Spending in Liverpool for 2014 is £2,595 per dwelling.

Now, obviously, the needs of her constituency are much greater than the needs of my constituency, but that is a full £700 more per dwelling than is spent in my constituency. So I do not believe that the people of Liverpool are being short-changed. They are properly funded for the services that they need.

Here is my contribution from last month’s debate (12/2) on Local Government Finance:

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Local government is important to everyone. It is about improving people’s quality of life, developing potential, protecting the vulnerable and supporting communities. That is why the Government’s attacks on local services are so destructive. When the severest financial cuts are made on the poorest, that is grossly irresponsible. I listened with horror to what the Chairman of the Select Committee told us: the Government have now admitted that they are no longer concerned about protecting the vulnerable and are more interested in protecting the rich—that is outrageous.


It is completely unacceptable that Liverpool, which on the Government’s own figures is the most deprived local authority in the country, has suffered the deepest cuts yet again. Liverpool will suffer drastic cuts in spending power this year and it will suffer them again next year, with its funding slashed by another 5.4%—£32 million—which is the equivalent of £148 a household. By contrast, Surrey Heath is facing cuts of £73,000—a mere 0.1% cut. That is an indication of where the Government’s priorities lie. In real terms, Liverpool’s funding has been cut by 52% since 2010, and the figure is likely to reach 58% by 2016-17. As 76% of Liverpool’s finance for local services comes from central Government, in recognition of the city’s needs, the cut will be devastating.


I was appalled to hear the Minister state at the beginning of this debate that he regarded that support as a handout. I call it justice; it is about recognising need. He sees supporting deprived communities as giving a handout, which he is rapidly withdrawing. It is an absolute disgrace, and I am pleased that he has put that on the record in this debate today. The reality for Liverpool is that services such as nurseries, care for the under-fives, social care for the vulnerable, which includes 5,000 care packages, library, regeneration and youth services will all be at risk. Whatever spurious lines he tries to go down, the finger of blame will be pointed clearly at the Government who will be responsible.


I noted that the Minister attempted to divert this debate by talking about Liverpool’s reserves. Those reserves are held because they are legally required to be held, mainly on behalf of schools. Furthermore, despite the devastating blows to local services coming from this Government to the city of Liverpool, the council and its mayor are responsible people and they are determined to maintain the city’s finances in a prudent manner, and they will not deviate from that.


Andy Sawford: My hon. Friend makes an incredibly important point about Liverpool’s reserves, which we calculate are equivalent to one month’s operating costs for Liverpool council. That is a prudent level of reserves. Perhaps, it wants more reserves in order to have some sustainability given the context that she is powerfully describing.


Mrs Ellman: My hon. Friend makes an extremely important point. Nothing that the Minister has said tonight can deviate from the reality that the Government are hitting hardest the poorest areas of the country. They describe the funding that they give as a handout, and they are shameless in their intention to continue hammering the poorest areas of the country. It is absolutely outrageous and absolutely unacceptable. Of course, the cuts in local government support to Liverpool are not the only blows being dealt to the city. For example, the hated bedroom tax is already affecting more than 11,000 Liverpool households, which are losing an average of £14 a week. That combined with the additional council tax charges that the poorest people are being required to pay means that a large number of people are now being asked to pay £16 a week more. That might not sound much to a millionaire or to people who are extremely wealthy, but for a poor person in work struggling to survive on a low wage and to maintain their family, this is an additional hammer blow, which is unacceptable and disgraceful. One consequence is increasing debt for vulnerable people, and that is something about which the Government should be concerned. Instead, they seem to have washed their hands of it and simply do not care.


I have described the current situation in Liverpool in relation to previous revenue support grant settlements and to what is going to happen in the coming two years. It is all credit to the city of Liverpool, its elected council and elected mayor, that the city is resilient. It is fighting hard to support jobs, back enterprise and bring investment to the city. For example, the mayor has already restored the cruise liner terminal. The council promotes investment worth millions of pounds. It is about to host the international festival for business on behalf of the United Kingdom. It is delivering apprenticeships and it has protected people from the impact of Government cuts. However, this settlement makes that task harder; indeed it might even make it impossible. The people of Liverpool know what is happening and who is to blame. Even at this late hour, I ask the Government to think again about the unfair cuts they are inflicting on the people of Liverpool and treat Liverpool citizens with the respect they deserve.


*SIGOMA ( SIGOMA is the collective voice of urban areas representing most of the large towns and cities in the Northern, Midland and SouthCoast regions of England. SIGOMA’s membership compromises of 33 metropolitan districts and 12 major unitary councils with similar characteristics. The combined population of SIGOMA councils amounts to over a quarter of the population of England and its members account for over 25% of English local government expenditure.