Liverpool on the brink of collapse due to perfect storm

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Not for the first time, Liverpool finds itself on the edge of the abyss.

A most proud and resilient city, this place has overcome the odds time and time again – Thatcher, Hillsborough, austerity.

But now it is facing a perilous perfect storm brought on by a terrifying pandemic and a government that simply can't keep its promises.

The council is now considering filing for what is known as a Section 114 notice, an emergency order that would immediately impose a ban on all spending other than the most basic statutory services.

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It is a move no local authority should ever have to make.

But unless the government dramatically changes course in how it supports areas with the highest levels of deprivation during this health crisis, the city will have no choice.

This isn't a political move.

The city's Lib Dem leader Richard Kemp – arguably the biggest thorn in the side of Mayor Joe Anderson's Labour administration – is fully supportive of the ruling group, he even grimly predicts that a Section 114 notice might not be enough, such are Liverpool's financial woes.

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So how did things get so bad?

Things have been bad for a while. Since 2010 Liverpool has been hit harder by austerity than any other city council, losing a mind boggling £433m of its central government funding, all in the name of austerity.

Just before the Covid pandemic hit, the council had been forced to find a further £30m in savings in its latest budget, set in February.

A decade of scrimping and saving and borrowing and investing has left the council's reserves at just £17m – ask anyone in local government just how small that safety net is.

Safety nets are there for emergency situations, like, say – a global pandemic.

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When coronavirus set in, it was always clear that local government would be at the forefront of the fightback in communities.

And it was equally clear that the challenge would be greatest for the authorities covering areas with the greatest levels of deprivation, poor health and poverty – like Liverpool.

It is not a surprise that a city with historic levels of respiratory illnesses, with huge issues of poverty and health inequality may go on to suffer disproportionately from this wicked disease.

Surely properly funding and supporting the local authorities for these areas would be a government priority?

Councils run public health services, they also support the most vulnerable residents through foodbanks, additional benefit support.

Liverpool is spending hundreds of thousands of pounds on the new school hubs scheme and school meal vouchers for struggling families.

It has forked out a huge amount housing all homeless people in the city in hotels and apartments and even ordered thousands of items of Personal Protective Equipment for those on the front line of community care.

As well as spending more – the council is losing out on millions in former crucial revenue streams.

Leisure centres and car parks are no longer bringing in revenue streams, some of the investments made in a previous bid to overcome austerity losses aren't bringing in any money whatsoever.

Through the austerity agenda, the government has increasingly told local government to rely on business rates for income – but thousands of businesses in Liverpool have closed down in recent weeks.

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If ever a city needed its government to step up and do the right thing then it is Liverpool.

So when on March 16, Local Government Secretary Robert Jenrick promised to do 'whatever is necessary' to support councils in their response to coronavirus, Liverpool had no choice but to believe him.

What has followed is two rounds of government funding, with the second remarkably decreasing by 32% in comparison with the first.

Rather than allocating funding on a needs or deprivation basis, the government has done so per capita.

The result is a gaping, terrifying £44m black hole in the council's wilting coffers and a very, very real prospect of the city going bust.

An emergency meeting will be held in June, with plans being drawn up for an emergency spending halt – but that may not even be enough to stop this proud city falling off the cliff altogether.

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