Tory coronavirus policy has left a Labour council facing ‘bankruptcy’

Boris Johnson talking about coronavirus
Steve Topple

Liverpool city council says it’s facing ‘bankruptcy’ due to government coronavirus (Covid-19) policy. The Labour mayor of the city has accused the Tories of “taking the money from the areas that need it most”.

The Canary has dug into funding data. We discovered that, while the government has claimed council cash for the pandemic is ‘fair’, some of the richer areas appear to be getting the better deal.

Coronavirus: bankruptcy warnings

The Liverpool Echo has reported that Liverpool Council is in dire straits. 10 years of politically motivated austerity has wiped £436m from its budgets. But now, with the pandemic hitting hard, this crisis has been compounded. The Labour mayor has claimed the government is giving the council “less” support not “more”. 

On 28 April, the government outlined how much emergency funding was being given to councils. This is to support them during the coronavirus pandemic. But for Liverpool, it seems the money is nowhere near enough.

As the Liverpool Echo wrote, the city council:

has only received £34m from government in two tranches, with the second lower than the first.

Before the crisis hit, the city council was forced to find a further £30m in savings when it set its latest budget in February.

The Echo says it’s also facing “£78m in increased costs and loss of income”. This is because things like car parks and leisure centres are shut. So, with only £17m in reserves, but a potential financial black hole of £44m, the council is considering if it should impose emergency measures. These could mean stopping all services except “statutory services to protect vulnerable people”.

A “perfect storm”

Liverpool city mayor Joe Anderson told the Echo:

Technically we could go bankrupt. …

We simply will no longer have enough income to meet what we are spending.

Anderson also said:

We are paying out huge amounts on the school hubs, school meal vouchers and other food for vulnerable residents.

The leader of the Liberal Democrat council opposition Richard Kemp backed up Anderson’s claims. He said:

Liverpool is caught in a perfect storm of the most needs and the least money, the reality is that even if we stop spending on anything except statutory services, that probably won’t be enough.

But the Conservatives claim that they’re helping local authorities who need it most. They say that they’re doing so in the “fairest way possible”.

‘Fairness’. Allegedly.

Local government secretary Robert Jenrick said:

Councils are playing a central role in our national fight against coronavirus and the government continues to back them at this challenging time.

That’s why I announced an extra £3.2 billion of support for councils to help them to continue their extraordinary efforts.

Today I’m setting out how the latest £1.6 billion of this will be allocated to councils in the fairest way possible, recognising the latest and best assessment of the pressures they face.

But in the case of Liverpool, the cash the government is giving it doesn’t seem ‘fair’ at all.

Compare and contrast

Liverpool city council’s total coronavirus funding is £33,993,417. With a population in 2018 of 494,800, this means funding of £68.70 per person.

Compare this to Buckinghamshire County Council, which the government is giving £47.85 per person to; this is based on the 2016 population. So, while it seems that Liverpool is getting more cash than a Tory heartland like Buckinghamshire, this is not the whole picture.

Liverpool city council was the fourth most deprived local authority in England, in 2015. 134 areas in the local authority ranked in the top 10% of deprivation that year. Buckinghamshire was the second least deprived county council, also in 2015. It had no areas in the top 10%, and only three in the top 20%.

So ultimately, while on the face of it Liverpool is getting more cash, the staggering levels of poverty outweigh this. Buckinghamshire is only getting just over £20 less per person.

“Taking money from the areas that need it most”

It’s these extremes of deprivation coupled with inadequate funding which led Anderson to say that:

Liverpool is a city with some of the worst levels of deprivation in the country, it is an absolutely crazy situation that instead of getting more government support, we are getting less.

They are literally taking the money from the areas that need it most.

Given that studies are already showing that the coronavirus pandemic and its results are hitting the poorest people the hardest, any decent government would ensure councils responsible for these people would be getting the maximum funding possible. But this is not the case for the Conservatives. And it could cause a further catastrophe on top of the pandemic in Liverpool.

Featured image via Sky News – YouTube

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  • Show Comments
    1. Perhaps if the Council didn’t sell off land at rock bottom prices to it’s favourite developers they might have some money in reserve. Or how about spending close to £100k last year on adverts telling people they’re fixing roads.
      A balanced article would look at the whole picture. But obviously this is Liverpool and The Canary (Tory government funded Canary with the adverts I’m getting) so there’s never going to be any sense or real journalism here.
      Editors – Can you tell us if you ran the government’s Covid 19 ads for free or if you accepted money for running them, ie profiting from the current crisis?

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