There’s £45m shortfall in Liverpool City Council’s budget for 2014-15, with more to come in the following two financial years. The reality is stark – Liverpool must save hundreds of millions of pounds or face going bankrupt. The latter is not an option, so – barring an unexpected, and significant, source of revenue – spending has to be slashed.
Thanks to the council’s new budget balancer gizmo, you’re in the hot seat. Like a real-life Sim City, you get to choose where the council spend its money over the next 18 months and, more importantly, where it doesn’t. So, what’s the thinking behind the app?
“It’s part of council’s commitment to open local government and comes directly from Mayor Joe,” says Councillor Patrick Hurley. “Other similar things include our budget meetings being filmed and going on the website and inviting opposition parties to take part in setting the budget.”
“It’s not a formal consultation, and it’s not legally binding. But it is a hugely important part of finding out what the public wants regarding how the city copes with cuts. It builds solidarity with the public, because everyone can see just how difficult it will be to balance the books. It’s a way of explaining to people that there are going to be some horrendous and heartbreaking options ahead.”
Heartbreaking indeed. The task is a case of finding oneself between the devil and the deep blue sea. Cut spending on tourism, culture, leisure or development – currently around one quarter of Liverpool’s budget – and you risk strangling the flow of cash into the city. Slash social services and you put Liverpool’s vulnerable people at significant risk.
Choose roads, refuse, regeneration and the city visibly suffers as infrastructure wanes and Liverpool faces monthly rubbish collections and potholes springing up around the city’s roads. There is not one way of reducing spending that does not seem to have consequences that range from deeply unpleasant to catastrophic.
You might think that trimming five per cent off every item is the fairest, kindest, least disruptive way to spread the pain (in fact trimming even ten per cent across the board will not balance the budget). However, reduce spending on children’s social care by just five per cent and there’s a chilling warning of the consequences:
Children’s home closes. No short breaks for disabled children. Fewer external services for children in care, children running away, adoptive parents.
So, children are a no-go. How about adult care? Just a whaffer-thin five per cent?
Reduction in specialist care services such as homecare for dementia which limits independence and potentially increase the demand on carers.
“A huge proportion of the city’s spend goes on adult and children’s care,” says Cllr Hurley.
“These are the most vulnerable people in the whole city. Cuts to these budgets are going to have a terrible effect on their lives.”
If you’re tempted to reduce spending to zero on these sectors the warnings are apocalyptic. Clearly then, some sectors have to be ring-fenced, or as protected from the knife as possible.
Set against such vital services, money spent on libraries, sports and recreation, tourism and civic buildings may seem like low-hanging fruit, but the budget allocation for these sectors is relatively small and the prospect of closures to libraries, council gyms and public buildings – or increased charges for using them – unpleasantly reductive. Nevertheless these will be the sectors that see budgets cut – or even removed completely – in coming years as the council has to find more desperate measures to metaphorically keep the lights on.
Whichever way you slice it Liverpool is in for a tough few years. In a zero-sum game such as this – rise or maintain spending here; cut it there – some services and the people who rely on them will inevitably suffer to protect others. In the face of such horrendous consequences it’s tempting to freeze – or even increase – spending and say to Hell with the balancing act. Not an option, says Hurley.
“If the books weren’t balanced, and we decided to set what some people call a “needs-based budget”, we’d see civil servants come up from Whitehall, park themselves in a hotel for six weeks, and make the cuts themselves with authority from Parliament. There’d be little account taken of the real needs of people in the city, the wishes of residents or the city’s reputation.
“It would be a disaster for Liverpool, not just in terms of the way the cuts would be implemented, but also for the way the city’s financial management would be perceived in the rest of the country.”
So an unbalanced budget isn’t an option. What about raising council tax, as happened in the 2012-13 budget?
“Council tax can be raised,” says Hurley, “but due to recent government changes, raises over a certain level can only be done after a referendum. And in any case, people are feeling the pinch themselves in their own household budgets. It’s not necessarily fair to ask residents to take too much pain themselves for local authority cuts when they’re under fear for their own jobs themselves.
Something Joe Anderson is pursuing is a review of assets that could be sold off – from Sefton Meadows to the green strips of land between roads in south Liverpool. This has the dual attraction of raising cash through the sell-off and then levying high council tax rates on the well-to-do residents. Yet the reality is that even selling off the family silver can’t cover the shortfall and certainly won’t be of much help over the next six months.
The council says that the required cuts are “unprecedented” and that it is “inevitable that some services will have to be withdrawn altogether”. Joe Anderson says that Liverpool will be the hardest hit city in the country, with the cuts amounting to £252 per household while the national average is £60.
£173m has already been cut over the last three years and the council has to save £156m over the next three years – so this year is simply one among many. Joe says that the city may be bankrupted – shorthand for unable to meet its obligations – by 2016-17. Hurley is in no doubt as to how hard Liverpool will be hit.
“I think a lot of people think the bulk of the cuts have already happened,” admits Hurley. “They need to realise that this is not the case. We need to do everything we can to oppose the ideological way the government is implementing its counter-productive austerity regime.
“We’ve recently been told that the country’s structural budget deficit won’t now be gone until 2020, a full five years after we were originally promised an end to austerity. In addition, David Cameron has said he’d like to see budget surpluses in the years after 2020, likely meaning further cuts in the years after 2020, even once the deficit has gone.”
The budget balancer app may be more of a PR exercise (albeit a clever one) than a genuine attempt to source input, although the council is also launching a stakeholder consultation to plan how and where to levy the cuts, but it shows that the choices facing Liverpool in coming years are limited – and the consequences harsh, probably much more so than many people realise.
“It’s set to do huge damage to the whole country’s economy, especially the cities of the north,” says Hurley. “It’s heartless, it’s economic madness, it’s ideological incompetence.”
• Try your hand at balancing Liverpool’s budget here – and let us know where you choose to make the cuts
• Top image by Mark Harrison via Creative Commons, Flickr